Thursday 24 June 2004

PRODUCERS INVEST TO SUPPORT UK SECURITY OF GAS SUPPLY

Responding to the House of Lords European Union Committee's report, Gas: Liberalised Markets and Security of Supply, Malcolm Webb, Chief Executive of the UK Offshore Operators Association (UKOOA), the representative organisation for UK oil and gas producers, said:

"The UK is the world's fourth largest producer of gas, supplying 102 billion cubic metres of gas from its offshore fields in 2003.  Gas production from the UK continental shelf (UKCS) peaked in 2000 and is now slowly declining by around 2 percent per annum, with the UK expected to become a net importer of gas at some point between 2005 and 2006.  However, sustained investment in current and new gas fields will ensure that domestic gas supplies will continue to meet at least 60 percent of the country's demand in 2010.

"Diversity of supply, at competitive prices, is fundamental to achieving security of supply, with open markets essential to reaching this goal.  Maximising recovery of the reserves from the UKCS should be at the heart of UK energy policy as this will prolong self-sufficiency and sustain security.

"UK gas producers are investing around £2 billion per annum in new gas developments on the UKCS out of a total annual investment of some £4 billion.  However, government too has an important role to play in helping producing countries create the right economic and legal climate to encourage long-term investment in energy supplies, whether here or overseas. 

"Infrastructure investment is a crucial issue, both internationally and in the UK, where expansion of storage is going to be increasingly important in balancing supply with demand, especially at peak times.  In any event, security of supply comes at a cost but the risks of under-investment in infrastructure far outweigh the costs of some extra investment."

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Note to Editors

1. The UK Offshore Operators' Association (UKOOA) is the representative organisation for companies licensed by the British Government to explore for and produce hydrocarbons in UK waters.  It has 30 members. 2. In October 2003, UKOOA published an information paper, Security of Gas Supplies, which is available at here.