ENERGY SERVICE AGREEMENT – OIL AND GAS UK

Our Ref: SH/15/4
8th February 2021


Dear Colleagues

ENERGY SERVICE AGREEMENT – OIL AND GAS UK

Members will recall that in 2019 the Offshore Contractors Association (OCA) informed the trades union of their intention to dissolve the OCA agreement. The RMT was not and had never had been a signatory to the OCA agreement; however the union’s negotiating team had been putting pressure on Unite the Union and the GMB to become a full signatory. The announcement that the OCA was dissolving the agreement started what has been more than a year of very difficult, long and protracted negotiations. Under the cloud of the coronavirus, faced with redundancies, pays cuts, and furlough; the three unions (Unite, the GMB, and the RMT) have used every means possible to protect our members’ terms and conditions.

I can now report that negotiations have concluded, with 14 offshore contractor companies consenting to sign a newly negotiated agreement, the Energy Services Agreement (ESA). To put this in perspective there were only seven offshore contractor companies that were signatories to old OCA agreement. The new agreement ensures the majority of our members’ terms and conditions which were included in the OCA agreement will be retained. It was hoped that 15 companies would agree to become signatories, however, Altrad has indicated they could not commit to signing the new agreement at this moment in time; however, it is anticipated that they will be in a position to sign up to the ESA once they have discussed this matter with their clients. Additionally, I have been informed that a further company, Bilfinger, may wish to become a signatory in the future. A joint letter from the trades union seeking to establish a Voluntary Recognition Agreement with each company has now been despatched.

The ESA will for the first time be administered by Oil and Gas UK (OGUK) which has traditionally distanced itself from any form of collective bargaining structures, leaving the contractor companies to organise the lion's share of the negotiating. However, early on in the talks it was apparent that the contractor companies were seeking to bring OGUK into the ESA as full members. Therefore, the trades union have secured a direct route to negotiate with the OGUK. The “Contractors Council” of OGUK will provide secretariat support for all ESA matters. The knock on effect of securing the involvement of OGUK means that the ESA will feature in the supply chain tendering processes of 23 of the 29 major oil and gas companies.

In summary the main points of the Energy Services Agreement (ESA) are as follows:-

· The ESA will give the three unions recognition in 13 offshore contractor companies. They are Aker, Altera, Brand, Kaefer, Muehlhan, Navitas, ODE, Oleochem, Ponticelli, Petrofac, Semco, Stork, Wood and Worley. This allows us to negotiate, represent and recruit members in these companies.
· The ESA will be incorporated into terms and conditions of employment to set minimum base rates and conditions.
· A Rate Adjustment Mechanism will be used in negotiating annual pay awards and will alter the base rate and related allowances largely in line with inflation.
· A Commodity Price Adjustment (Oil/Gas prices) will provide the potential for additional supplementary increments, but base rates will not go down if prices drop.
· The existing OCA hourly base rate will be increased by consolidating field break payments into that base rate. (Increase on hourly rate from £22 to £25 approximately)
· Delay payments will be replaced with a payment for all the hours worked.
· Standby payments will remain the same, other than retention payments which will be 4 hours/day.
· Training payments will be paid for the duration of the course due to increased use of CBT.

Having considered this matter, the union’s National Executive Committee has instructed me to advise the offshore contractor companies and OGUK of our acceptance of the ESA and to formally become a signatory to the new agreement. This instruction has now been carried out. The National Executive Committee notes that the ESA protects our members existing terms and conditions while giving this union a foundation to build on for the future. This agreement will ensure that there will not be ‘free for all’ in the oil and gas industry which would inevitably lead a race to the bottom; which in turn would result in the corrosion of our members’ pay, terms and conditions. To all intents and purposes this is a Voluntary Recognition Agreement which will give the RMT the opportunity to shape the future. There are obviously issues within the ESA which will inevitably need addressing, however, for the first time this union will be a signatory to an agreement that allows us to recruit members, elect Representatives and develop a model similar to that which exists in Norway; all of which have been long term ambitions for the union’s negotiating team.

I trust this keeps you fully advised.

Yours sincerely

Mick Cash
General Secretary