In oral evidence to the House of Commons Energy and Climate Change Select Committee today (28 June), David Odling, Oil & Gas UK’s energy policy manager, said: “Oil & Gas UK believes that gas has a greater role to play in the UK’s future energy mix than current policies are allowing for, when balancing the competing demands of lower emissions, security of supply and cost. Gas is cost effective, will cut emissions sharply, the technology is proven and it will secure our electricity supplies. In contrast, present policies are going to strain both financial and supply chain resources which will be both very costly and risky.

“While the industry has recently invested some £10 billion in gas import routes allowing the UK to boast the most diverse gas supply in western Europe, indigenous production now and in the future will play a major role in gas supply. Indeed, production from the UK’s continental shelf currently satisfies two thirds of the nation’s gas demand and with a stable, predictable business environment that encourages investment has the potential to still meet 40 per cent of demand in ten years’ time.

“However, the unexpected tax increase announced in Budget 2011 damaged investor confidence and marginalised investment to the extent that the annual production decline rate over the next decade will be about 1.5 per cent higher than previously expected.

“The importance of gas in our future energy supply and the role that domestic production can play makes it imperative that a cure is found for the chronic fiscal instability of the UK’s oil and gas tax regime and that uncertainty over access to tax relief on decommissioning is removed.”

Ends

For more information, please contact Sally Fraser on 020 7802 2404.

The evidence session can be viewed here for one month from the date of this release.

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