Aberdeen to receive £250m from UK Government to preserve oil hub status

Agreement comes after a global oil price slump prompted major producersl to announce severe job losses and salary cuts

Aberdeen is to receive up to £250 million from the UK Government as part of a new City Deal to protect its status as a hub for the country’s oil and gas industry, under a new agreement.

Funding for the long-awaited agreement, which comes after a global slump in the value of oil prompted major producers such as BP and Shell to announce severe job losses and salary cuts for existing employees, will be matched by the Scottish Government.

It is hoped that the City Deal will provide a much-needed shot in the arm for the economy of North East Scotland, allowing for the creation of a new energy innovation centre and helping the industry to exploit remaining North Sea oil and gas reserves.

The funding will also help with the expansion of Aberdeen harbour, enabling the city to compete for decommissioning work, ministers said. Greater digital connectivity and support for growing pharmaceutical and agri-food industries are also promised.

David Mundell, the Scotland Secretary, will visit Aberdeen later to sign the deal on behalf of the UK Government. David Cameron will then announce further measures to safeguard oil and gas sector jobs as he meets local workers. 

“Oil and gas is a crucial sector, not just for the North East of Scotland but for the whole of the UK. I know it’s a very tough time for people who work in the industry and their families, and I am determined that the UK Government will do what it can to support them,” Mr Mundell said. 

“We need action which will help in the short, medium and long terms – building a bridge to the future of the North Sea; helping the UK’s oil and gas industry to export its world-class expertise around the globe; and encouraging diversification of the economy to create new opportunities in other sectors too.”

Aberdeen City and Aberdeenshire councils submitted a bid for a UK City Deal worth £2.9 billion to both Governments last year, but negotiations have been rushed through in light of the downturn in the oil industry. A week ago Nicola Sturgeon, Scotland’s First Minister, wrote to David Cameron urging him to sign an agreement on the city’s future “as a matter of urgency”.

City Deals are UK Government initiatives in which investment is targeted to boost local economic growth. A similar agreement worth £1.1bn for Glasgow and the Clyde Valley region was signed in 2014.

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