Monday 23 October 2000

Survey Shows UK’s Oil and Gas Industry Plans Big Boost to Investment in Britain in 2001

A UKOOA survey of the investment intentions of the UKs oil and gas operating companies has been released today by the Industry Leadership Team (ILT). It reveals that operators intend to increase investment in the UK Continental Shelf (UKCS) by more than 33% over 2000 investment levels.

The survey shows that new investment next year could amount to over £4bn, even before exploration expenditure is included. This compares to a figure of around £3bn that operators expect to invest by the end of the current calendar year.

Nearly half of next years potential investment has been approved, and operators leaders are confident that the big boost can be delivered.

Malcolm Brinded, Managing Director of Shell Expro (Shell UK Exploration and Production), who co-chairs the ILT, commented on the survey: "The return of confidence to the UKCS was initially slow following the collapse of the oil price in 1998, reflecting the maturity of the UK basin. However, the work of PILOT and the combined efforts of companies throughout the supply chain are beginning to bear fruit. The improving competitiveness of the UK is allowing operators to increase capital investment here in the face of tough global competition. I am increasingly confident that the long term PILOT aspirations* for sustained investment and employment in the UK oil and gas industry will be realisable.

"It is important not to lose focus. A significant amount still has to be done to ensure that all the potential investments gain approval but the continuing efforts to keep improving the UKCS competitive position can only help. Investment levels in the next few years are going to be critical in deciding the future of the UKCS."

Mike Mannering, ILT member and Managing Director of Schlumberger UK, added: "It is crucial that we get this investment next year. The resources of the contracting and supplies section of the Industry will find demand elsewhere in the world if projects are not forthcoming here.

"We can only hope that the current favourable economic conditions will prevail, as this will allow the operators to deliver this large increase in investment. UK based contractors are as competitive as any in the world and thereby able to ensure that the UKCS will remain competitive."

Note to Editors

1. PILOT, the successor body to the Oil and Gas Industry Task Force (OGITF) was established in January this year to ensure that the OGITF deliverables and vision are achieved. PILOT is made up of twenty-three key Government representatives and recognised leaders from the industry and meets on a quarterly basis.

2. The Industry Leadership Team (ILT) was formed in 1998 to represent the oil and gas industry supply chain and unions during the deliberations of the OGITF and now continues in PILOT. It is made up of twenty-one key figures from across the industry, including operators, contractors, suppliers and unions.

3. PILOT Objectives

To make Pilots vision a practical reality, specific deliverables were defined. The strategy is for 10 years of Industry/ Government co-operation aimed at achieving the following outcomes in the year 2010.

* Maintenance of a production level of 3m boepd

* £3bn per annum invested

* Prolonged self sufficiency in Oil & Gas

* Up to more than 100,000 more jobs than would have existed

* 50% increase in exports (by 2005)

* £1bn per annum additional revenue from new business

4. Recent announcements concerning investments

Operator Field(s) Approximate Investment

BG Blake £158 million

BP Amoco Lomond/South Everest £71 million

Shell Gannet/Kingfisher/Curlew £50 million

Conoco Vixen £35 million

BHP Keith £25 million

Phillips Jade £191 million

ExxonMobil Skene Field

BP $4billion over 4 years

Shell 50% increase in previous capital expenditure plans for 2001, to $1,200m

Kerr McGee Leadon Field $700million

Talisman Beauly/Halley/Hannay Capital

Expenditure up 66% in 2001 over 2000

For more information, please call 020 7802 2400.