Siol nan Gaidheal
Piracy in the North Sea

Following the Piper Alpha disaster in July 1988, Lord Cullen set up his enquiry committee to look into the safety of those working offshore, in one of the harshest environments Scotland has to offer. This pleased the majority of the offshore workforce, who for several years had been complaining that safety standards were being rapidly eroded in the search for greater profits by the oil companies. More than ten years on from the North Sea's greatest disaster, how much has actually changed? Let's look at the overall picture for the North Sea before drawing any conclusions.

CRINE
In the early 1990's a new acronym winged its way offshore to roost on the rigs - CRINE. This stood for Cost Reduction In the New Era, and soon became universally loathed by those offshore. The concept of 'multi-tasking', (one man doing three people's jobs) started to be applied to the offshore workforce rather than Bill Gates' well-known computer software. Numbers of personnel were cut back, and the oil companies themselves began shedding jobs, sub-contracting services out to reduce their costs in personnel wages and pension schemes. The proportion of sub-contractors varies from area to area, but is generally between 80-90% of those offshore. Essential maintenance schedules were reduced, as were the budgets for equipment replacement and repair. As the industry suffered through two down-turns in the price of oil, this squeeze was applied further down the line to the sub-contractors, both on the production and exploration side, and costs were reduced further through down-manning and less spending on critical items. This is one area which will have a massive effect a few more years down the line, and in fact closely reflects the situation which led to the initial Piper Alpha disaster. The Health and Safety Executive (HSE) have recently issued notices to several operators such as Shell and Elf, regarding potentially disastrous situations on some of their platforms. Drastic remedial action was called for in at least two instances, resulting in the platforms being shut down temporarily whilst repairs were effected.

Safety
The offshore safety culture is something which is constantly talked about by oil companies and contractors alike. What it actually means differs widely, depending with whom you are discussing it. To onshore senior management, it implies that all operations are based around safety considerations, and cost does not enter the equation. This is the official party line, spouted to the press and government ministers on all appropriate occasions. Talk to those lower down the rungs offshore, however, and an entirely different picture starts to emerge, where lip service is paid to concepts of safety, and the rush to get the job done in as short a time scale as possible is the norm. In a recent survey within the workforce of a major North Sea contractor, seventy per cent of respondents said that they were afraid to speak up on safety matters. The HSE figures for 1997 show an 11% increase in workplace death. Until laws are pushed through with regard to corporate liability, meaning that senior managers are held accountable, nothing will change, and those offshore will continue to work at risk from decisions based entirely on financial considerations.

The latest scam on reducing costs is the importation of Latvian workers through an Aberdeen agency supplying drilling contractors. Work permits are not required to work offshore outwith UK territorial waters, a holiday visa is sufficient to enter the EU, and so another legal loophole is exploited. It is not hard to imagine exactly how well trained and well protected these unfortunate personnel will be. After all, if you damage a few, there are always millions more willing to take their places...

Profits
Record oil and gas production in the British sector of the North Sea over the past few months has led to a massive cash bonanza flowing into the coffers of the offshore operators, BP Amoco and Shell, among others, announced profits which spectacularly exceeded best expectations. Some estimates put the government's concomitant tax-take for this year at well over 3.5 billion. The commercial viability of the oilfield's drilling and service contractors, during this same period, continued to slump, with as many as 17 rigs stacked in Invergordon in the middle of the year. 4,000 drilling workers entered the dole queues as a result of these cutbacks. Meanwhile, BP Amoco reported 1999 profits up 40% on 1998 figures. Shell's full-year figures were similarly up 38% over 1998.

Control of the market
The major oil companies have never given up on the idea that they can somehow regain control over crude oil prices. To an extent, they have some degree of influence on price, through their levels of expenditure on exploration and production. The 3 largest private companies, Exxon-Mobil, BP-Amoco and Shell, now control 10 percent of the world's crude oil production. The next 15 largest publicly traded western companies control another 10 percent. OPEC controls around 40 percent, and 4 countries - Mexico, Norway, Oman and Russia - account for another 18 percent. If these 4 groups coalesced, they would control almost 80 percent of world oil production, which meant that they could virtually dictate the crude oil price.

Union Legislation
With the introduction of the new trade union recognition legislation, the Employment Relations Act, on June 6th 2000, offshore workers were finally granted the rights to representation which most workers world-wide have automatically assumed were theirs. Not without a fight by the employers prior to this, as the United Kingdom Drilling Contractors Association (UKDCA) announced a sweetheart deal with the Amalgamated Electrical Engineering Union (AEEU) to represent their work force. So far, the reaction offshore has been to view this sweetheart deal with the contempt it so obviously deserves. The idea of belonging to a union recommended by your employer and with a long history of screwing its members (remember Timex, the Ford factory in Dundee, etc., etc.) does not seem to be appealing to the average offshore punter. The Oil Industry Liaison Committee (OILC) on the other hand, is gaining support daily. This union (formed just after Piper Alpha) has a long and creditable history of taking on oil companies and drilling contractors over employment issues, and has won most of its cases. None of the contractors want to admit it this early, but they have had a glimpse of the future offshore, and accountability is becoming the name of the game.

Government involvement
The pace of growth in the big western economies, which helped fuel the price of crude oil, means that cash has flooded through the doors of the major oil companies faster than they could ever have imagined. The wave of global consolidation in the industry has also led to increased profits. However, as the British Unionist Labour Party tries to justify its own shortcomings on fuel tax by attempting to shift the blame entirely onto the operators, they should beware. There is some speculation that Hen Broon will land the oil industry with a windfall tax, an upstream levy which would be easily set up. This would give him the opportunity for a cut in petrol duty next Spring, just in time for the elections. But Brown would do well to think long and hard - these companies are global players, and whilst striving to maintain good relations with governments all over the globe, seek stability with a minimum of interference. They can easily move their business somewhere else...

Conclusions
So where does all this leave Scotland? The coffers in London are filling nicely, the global corporations are doing well, senior management cannot yet be held responsible for the increasing death toll offshore, many Scots have lost their jobs in the industry, and they're bringing in nice cheap Latvians to take over the jobs which remain. Is it only Siol nan Gaidheal which thinks that this situation is unacceptable? Glance over the water to one of our nearest neighbours, a country with which Scotland has had links for well over 1,000 years or more. Norway. Independent for many years, since shedding its own England (Sweden) last century. Not in the EU - decided to go it alone. Economy - doing nicely, thanks, partially due to long standing union/government co-operation, and also due to the fact that 51% of every drop of oil produced becomes the property of the Norwegian government. And yet the global corporations are queuing up to drill for oil there, despite unionisation, government legislation, and a very strong environmental lobby. Look to Norway, Scotland. There lies what might have been, and what might still be - if only the nettle is grasped.


Return to Energy Return to Index

On-Line Copyright © Siol nan Gaidheal 1995 - 2014, All Rights Reserved