Newspaper article The Journal (Newcastle, England)

Welcome for Plan to Keep the Oil Industry Afloat

Newspaper article The Journal (Newcastle, England)

Welcome for Plan to Keep the Oil Industry Afloat

Article excerpt

Byline: Andrew Mernin

MEMBERS of the region's embattled oil and gas sector have welcomed news of a Government rescue package to help cash-strapped North Sea oil firms battling for survival in the recession.

MPs are reportedly finalising the terms of a package amid warnings that more than half the businesses in the sector will fail this year, putting tens of thousands of people out of work.

The plan is thought to include several unprecedented measures, including immediate release of several hundred million pounds held by the Treasury in accumulated tax credits.

In recent years, the industry has boomed as oil prices rose. However, it is now contracting, largely due to the USEUR100 drop in the price of oil and an inability to raise new funds from the frozen debt and equity markets.

In the North East, the oil and gas industry remained relatively unscathed by the global slowdown last year but this year it has begun to show signs that it is suffering.

Last month one of the region's biggest firms in the sector - pipeline supplier Wellstream - announced plans axe up to 90 jobs at its Newcastle manufacturing base because of the difficult trading environment.

Guy Adams, of oil industry publication Oilinfo, which recently established a base in Newcastle, said the package would help the region's small and medium firms which service North Sea oil rigs, pull through.

However, he also questioned why the Government had not acted sooner to lift the industry.

"There are a few companies in the North East that are struggling and you seem to hear about it on a daily basis.

The rescue package has come too late but it's better late than never. It was the Government that got us into this mess so they should get us out of it.

"The big oil companies will always be fine, but it's the small and medium firms that have been most affected and we have a fair amount of those in the North East. …

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