Wednesday 19 April 2006

TRADE BODY UNDERLINES CONTINUING IMPORTANCE OF OIL AND GAS AND CALLS FOR SECRETARY OF STATE FOR ENERGY

The UK Offshore Operators Association (UKOOA), the trade association which represents UK oil and gas producers, has submitted its response to the government's energy review, which includes calls for:

• energy policy to recognise and reflect the fact that the UK will become more, not less, dependent on oil and gas for its energy supply over the next 15 to 20 years; and
• the establishment of a separate department and the appointment of a Secretary of State with responsibility to develop and provide leadership on energy policy.

In its submission, UKOOA argues that energy supply in a modern, highly developed economy is a matter of such strategic importance that it demands much greater prominence within government than it currently has in the UK.

The trade body claims that the UK's need for a Secretary of State at the head of a separate government department with expertise in energy matters is particularly pressing.  Energy policy, which includes demand as well as supply side issues, now needs to be given its own place, with connections to all parts of government and better representation in the EU and internationally.

Malcolm Webb, UKOOA's chief executive, said:  "Energy policy is currently being determined by a number of separate teams in different departments right across government.  We need clear and coherent leadership from a single source within government."

Government forecasts show that the country's dependence on oil and gas will increase rather than diminish over the next decade.  Oil and gas currently provide about three quarters of primary energy supplies and this is forecast to increase to 80 percent or more by 2020.  That which the UK does not produce itself will have to be imported, at significant extra cost to the economy.  Maximising domestic oil and gas production should therefore be one of the prime goals of energy policy.  Current estimates suggest that offshore reserves of between 16 and 27 billion barrels of oil and gas still remain to be recovered. 

Yet, in its submission, UKOOA points to the different, sometimes conflicting regulatory and fiscal positions taken by various parts of government which could limit the extent to which the UK is able to recover its own reserves. 

"Decisions taken by different government departments or organisations can affect domestic oil and gas production at many levels, damaging competitiveness and deterring the investment needed to sustain activity", says Malcolm Webb.  "There is a real risk that a significant portion of the countrys oil and gas reserves will remain undeveloped, or even unexplored, thanks to the policy conflicts arising out of this multi-departmental approach.  

"Its time for the government to focus its energy policy through a dedicated department with full Cabinet status. The current dispersed approach will not deliver the outcomes that the nation needs."

For more information, please call 020 7802 2400.

Notes 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 37 members. 

2. Click here for a summary of UKOOA's submission to the governments energy review. http://www.oilandgas.org.uk/ukooa/newpublications/srchResults.cfm?frmPubCode=REF18