The Wallsend firm says it feels let down after the Government failed to implement its own industrial strategy for the oil and gas sector

Ministers have been accused of letting down the North East after Government-subsidised work went abroad and 200 workers in the region were given notice of redundancy.

Up to 200 workers at Wallsend’s OGN Group could lose their jobs after a much needed multi-million pound contract went overseas - despite winning tax breaks from the UK Government and being trumpted by a Conservative Minister.

The Tyneside yard had hoped to win work for the £2bn Maersk Culzean gas project in the North Sea, but contracts have now gone to competitors in Singapore and the Netherlands.

Workers described the news as bitterly disappointing and voiced their anger the project had received substantial tax incentives from the UK Government while just “crumbs” were thrown to the North East. Their representatives said the job losses could be the “end of a workforce” on Tyneside.

Unite shop steward Steve Hastings said: “We’ve been talking for months and months with Ministers and MPs but we’ve had no answers and nothing has been done. It’s so disappointing for the workers here. We have young people who’ve just started apprenticeships and training – I just feel devastated for them.”

OGN had been vying for the chance to build a wellhead platform jacket and other equipment for Maersk Oil, but the contract instead went to Heerema Fabrication Group.

Maersk Oil said the work would benefit Heerema’s Hartlepool yard but a lack of transparency about the deal called into question the level of work coming to the North East. It eventually emerged that much of the contract was based at Heerema’s yard in Vissingen in the Netherlands.

The Culzean project has received substantial incentives via a Government scheme which exempts profits from the supplementary charge levied on oil and gas operators.

At the time the Exchequer Secretary to the Treasury Priti Patel - who is now Employment Minister - hailed the Government’s role in securing the deal through a tax allowance.

Terry Telford, a shop steward at OGN for the GMB union, said workers were in disbelief that such support could be afforded to operators with a lack of commitment to UK jobs.

He said: “The worst has come to bear. Taxpayers will be wondering what exactly they are getting out of this when huge incentives are given to oil and gas operators yet the UK is thrown the crumbs from the table.

“The foreign competition will be over moon because not only have they won the work, but this is another competitor potentially knocked out for them.

“It’s extremely disappointing and it means that valuable skills will leave the area and the North East will be impoverished because of it.”

Fellow GMB representative Eric Rawson said OGN’s facility was one of the last yards on the Tyne capable of producing large pieces of equipment and it was now under threat.

At the height of operations OGN has employed around 1,200 full-time staff as well as contractors, but that number is now being wound down as work disappears.

A spokesperson for the firm said: “We feel very let down by the Government, which has failed to implement its own industrial strategy for the oil and gas sector that would have provided a level playing field for UK businesses.

“As a result, our workforce is not only being impacted by the drop in the oil price, it is also bearing the brunt of the frustrating trend of contracts being awarded away from the UK.

“Our management team is working hard to develop a pipeline of work to support our workforce and once again help it grow by applying the innovative and efficient practices the industry demands.”

While almost three-quarters of oil platforms in the North Sea were once built in the North East, a growing proportion of fabrication work now ends up in Italy, Korea, Spain, Dubai and Holland.

UK fabricators have found it difficult to compete with Asian yards as their governments fund the projects on credit with the money being repaid once the oil field is producing.

The Department for Energy and Climate Change did not respond to requests for comment.

A Maersk Oil UK spokesman: “The Culzean project continues to progress, with contract awards to be announced in due course. The development will make a positive contribution to the UK in terms of energy security, employment and investment.”

Source: www.chroniclelive.co.uk

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