Thursday 16 July 1998

Government Proposals Place Gas Jobs And Investment At Risk

Implementation of the Governments proposals to review energy sources will have a negative impact on investment and jobs in the UKs gas exploration and production industry, an independent report reveals.

The report, entitled Impact of the Energy Sources Review Proposals, was prepared by industry analysts Arthur D Little for UK Offshore Operators Association (UKOOA), the representative body for the UK offshore oil and gas industry.

It spells out the potential impact of the Governments proposals to restrict gas-fired power generation on the development of new gas fields in UK waters as well as the effect on industry capital investment and operational expenditure. The report also highlights the possible cost to the Treasury in terms of lost tax revenues.

By comparing projections of demand for UK gas over the next five years, both with Government restrictions in place and without, the report calculates that Government intervention would result in the deferral of new gas fields with the following consequences for the offshore gas industry:

* Levels of investment in exploration activity reduced by £0.7billion.

* Delayed investment in new gas fields of nearly £2 billion.

* A total of £1.8 billion in lost tax revenue.

Government Proposals/2

* Reduction in field operating expenditure by £0.5 billion.

* 1,300 jobs in the offshore gas industry lost, on the basis of current operational manning levels.

The report also concludes that delayed investment in onshore generating plant will be

£3 billion by 2002.

James May, UKOOAs Director-General, said: The report confirms our fears, voiced at the time of the Government announcement at the end of June, that continued restrictions on gas-fired power generation would have a serious impact on investment and jobs in the gas industry.

UKOOA will be commenting on the Governments proposals in full by the 20 July deadline and will address the economics and underlying implications for employment.

Note to Editors

* A copy of the Arthur D Little report, Impact of the Energy Sources Review Proposals, is attached. Further copies are available from the UKOOA Communications Department. Tel. 0171 802 2422.

For more information, please call 020 7802 2400.