UK Budget should safeguard £6bn shale supply chain, says trade group

The government’s upcoming Budget Statement must include specific measures to safeguard the UK’s shale development supply chain, or risk losing out on tax receipts of over £6 billion from small onshore oil and gas companies, according to the industry trade group.

The Onshore Energy Services Group said in its latest policy paper ahead of Wednesday’s Treasury statement that the UK could see much of the work developing the nascent shale sector go to foreign firms, unless action is taken.

Although early work in developing the UK’s shale potential has been led by independent British companies including IGas and Cuadrilla, alongside utility giant Centrica, the trade group has warned that there is “a real risk” that the supply chain will come to be dominated by foreign interests and an imported workforce. 

“Whilst we welcome the work Government has been doing to create a policy environment that favours onshore oil and gas development as part of the UK energy mix, we hope the chancellor will use the Budget Statement to announce specific measures aimed at safeguarding the future of home-grown supply chain SMEs that, between now and 2024, could contribute over £6 billion to the economy through taxes,” said the group’s chief executive Lee Petts.

Petts will present the paper to the UK Shale Gas and Oil Forum later today and will call for the government to introduce a requirement for mandatory supply chain action plans while extending the Advanced Manufacturing Supply Chain Initiative to cover shale gas activities.

Meanwhile the group is also developing a set of industry standards for procurement guidelines in a bid to boost the chances of smaller companies securing contracts, and says it hopes that the onshore industry will adopt these principles as standard.

The Budget Statement will be presented to parliament early Wednesday afternoon.