Monday 24 February 2003

Offshore Oil and Gas Industry Response to Energy White Paper

The UK Offshore Operators Association (UKOOA), the representative organisation for oil and gas exploration and production companies operating on the UKs continental shelf, welcomed the publication today of the Governments energy white paper and acknowledged the need for policy change as Britain moves from being a net energy exporter to a net importer.

However, UKOOAs Director General, James May, highlighted the continuing importance of UK oil and gas in the overall fuel mix for Britains future and underlined the Governments role in helping to ensure that the recovery of Britains remaining indigenous reserves is maximised.

Diversity of supply, at competitive prices, is fundamental to achieving security of supply, he said. The UKs remaining oil and gas reserves are estimated to be in the region of 24-32 billion barrels of oil equivalent. This is a valuable national resource, which if recovered to the maximum, will enhance that diversity. The Government has a responsibility to create the right regulatory, fiscal and business climate which will encourage the industry to continue investing in the UK continental shelf against a long-term backdrop of fields becoming smaller and declining production.

Mr May also highlighted the work being carried out by the oil and gas industry with the UK and Norwegian governments to open the way for new supplies of gas from Norway (in the late 70s and through the 80s, up to one third of Britains gas supplies came from Norway). However, he also emphasised the necessity for investment in the onshore infrastructure to cope with increased volumes of imported gas from Norway and elsewhere.

Mr May said:

Investment in energy transmission networks is a critical aspect of security of supply and, therefore, energy policy overall. The upstream oil and gas industry has a good record in delivering such investment. However, the regulatory emphasis onshore has, in recent years, been concentrated on economic efficiency, and needs to be moved more towards securing appropriate new investment in the National Transmission System, with a margin of spare capacity to provide both flexibility and resilience.

As UKOOA has stated several times before The risks to the UKs economy of under-investment in the National Transmission System far outweighs the costs of some over-investment.

Furthermore, in the wider international context, there is a major role for both national and European governments in using their political influence to help supplier countries create the right political, economic, legal and business climate to encourage long term investment in energy supplies, with technical and financial expertise coming from industry and commerce.

For further information, please contact:

Trisha O'Reilly UKOOA Communications Team

Tel: 020 7802 2422/2400

Fax: 020 7802 2401

Email: toreilly@ukooa.co.uk

Pager: 07659 153 069