Workers in Europe's oil hub hope for the best

AFP , Sunday 25 Jan 2015

On the docks in Aberdeen, oil workers put a brave face on hundreds of job cuts linked to sinking crude prices while union leaders warn that the worst is yet to come.

"It has happened before and it will happen again. There will probably be job losses but that's the way the industry works," said Tony Maguire, a rig worker.

But for Jake Molloy, a regional organiser for the RMT union in Aberdeen, Europe's oil capital in northeast Scotland, workers who lose their jobs face "a lifetime crisis".

Molloy was one of 20,000 people who lost jobs in a downturn in 1986 and said the decline is more dangerous now because North Sea offshore fields are depleting.

"I hope this is just a blip... but I am more concerned now than I was (then)," he told AFP in an interview in the city, which has been built on oil revenues.

Oil prices are currently hovering at around $50 per barrel for Brent crude, the European benchmark, representing a decrease of 60 percent since June when prices were at $115 a barrel.

Oil majors have been quick to react: BP, Shell, Conoco Phillips all announced cuts in the last six months.

More than half of all jobs in Aberdeen are linked to oil, yet at a time when the industry might be facing the biggest crisis in its history, the atmosphere in the Scottish hub has remained strangely calm.

In the port of Aberdeen, where dockers are busy loading equipment for a rig onto massive vessels, workers were trying to stay optimistic.

Robert, who has worked on the dock for 29 years and whose son is doing an apprenticeship in the sector, dismissed the latest fall in prices as "a few blips".

Residents still complain about traffic jams -- seen as a positive sign reflecting the city's commercial buzz and the failure of road infrastructure to keep up.

"If things were really bad the big building outside the airport would stop progressing," said Dave, a taxi driver, referring to a luxurious office complex being prepared for Norwegian oil services firm Aker Solutions.

Job cuts and their potential consequences on the city have not really sunk in but the warning signs are there.

"Aberdeen could be a ghost town in 10 years' time," said Colin Welsh, chief executive of Simmons & Company, a US-based bank specialising in the oil industry.

Aberdeen South's member of parliament, Anne Begg, said job cut announcements have not resulted in actual layoffs yet.

"There will be a time delay, and there always is, so we could be looking at another six months to a year before it really starts to impact the economy," Begg said.

The oil and gas industry has made Aberdeen prosperous -- salaries in the industry are two and a half times the national average -- and the Scottish National Party based its failed drive for independence on a prediction of future bountiful revenues from the North Sea.

Local residents, a majority of whom voted against independence, now point out that the SNP had based its budget calculations on a $110 barrel.

"The oil prices have fallen, I did not predict that but nobody else did," said Fergus Ewing, the SNP's regional minister for commerce, energy and tourism.

"In politics you play the cards as they fall, we respond to the challenges, the challenges are very serious," he said.

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