Wednesday 3 September 2008

OIL & GAS UK WELCOMES SHADOW SECRETARY OF STATE FOR BUSINESS TO ABERDEEN

Representatives of Oil & Gas UK member companies welcomed Alan Duncan MP, the Shadow Secretary of State for Business, Enterprise and Regulatory Reform (BERR) to its Aberdeen office today (3 September 2008).

Malcolm Webb, Oil & Gas UK's chief executive, said: "We welcomed the opportunity to highlight to the Shadow Secretary of State the vital role the UK oil and gas industry plays in the economy. We impressed on Mr Duncan the significant contribution our industry makes, meeting 70% of the nation's energy demand, supporting nearly half a million jobs and contributing £35 billion to the country's balance of trade.

"We also stressed the importance of the UK based supply chain which is a global hub for oilfield goods and technological expertise with export earnings of £6 billion a year and which has the potential to go on growing for decades to come.

"However, we also stressed that the continued success of the industry must not be taken for granted. While our own reserves have the potential to meet 65% of our oil demand and a quarter of our gas demand in 2020, investment attracted to the UK so far only reaches 10 of the 25 billion barrels of oil and gas that remain to be extracted.

"We live in a reality where, by the government's own forecasts, the country will rely on oil and gas to roughly the same extent in 2020 as it does today, with any oil and gas not produced from our own reserves being imported at the nation's expense. The nation therefore needs the government to make changes to the regulatory and fiscal environment to encourage international investors to provide the much-needed extra capital to maximise the recovery of our reserves."

Commenting on recent calls by Compass for a windfall tax on energy companies, Malcolm Webb said: "It is difficult to imagine anything which would do more damage to investor confidence than the ill-informed calls for a windfall tax to be levied on the industry.  If this were to happen it would be the fifth tax hit on the industry since 2002, and would contravene a categorical government assurance that there will be no further tax increases during the lifetime of the current Parliament.  

"We briefed Mr Duncan on the proposals put to the Prime Minister in May showing how the industry believes recovery of the UK's oil and gas could be boosted by increased investment.  Despite current high oil prices, there are still significant oil and gas reserves that are not attracting the investment required due to technical challenges and soaring costs. The strategy proposed is to promote investment in marginal field opportunities; to unlock reservoirs west of Shetland and to encourage enhanced oil recovery from UK fields which typically show 45% recovery rates.

"The UK has had the very good fortune to be endowed with such rich reserves of oil and gas.  It is vital that discussions continue across all parties so that that message is understood and everything possible is done to ensure that the nation will continue to reap the considerable benefits that flow from a strong indigenous oil and gas industry for many decades to come."

ENDS

NOTE TO EDITORS

Oil & Gas UK is the leading representative organisation for the UK offshore oil and gas industry.  Its members are companies licensed by the Government to explore for and produce oil and gas in UK waters and those who form any part of the industry's supply chain.

 

 

 

For further information, please contact:

Sally Fraser

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