A leading group of 31 independent oil companies has challenged the UK government ...

A leading group of 31 independent oil companies has challenged the UK government’s assumption that by 2020 the UK is likely to be importing about 75% of its primary energy. The Oil and Gas Independents Association (OGIA) says that the decline in hydrocarbon production from the UK continental shelf (UKCS) can be slowed through active encouragement of continued exploration. There is still a great deal of oil and gas to be found and exploited, it says in its submission to the Department of Trade and Industry’s January 2006 Energy Review consultation. The DTI’s consultation document (page 5) reads: ‘By 2020 we are likely to be importing around three quarters of our primary energy...’ ‘This seems very pessimistic unless it is government policy to discourage future investment in the UKCS by accepting this 75% import dependency and the significant loss of UK tax take, employment, the negative impact on fuel poverty and the UK balance of trade which it implies,’ notes OGIA. Provided industry and government create the conditions where investment can flourish in the UKCS, OGIA believes indigenous production of oil and gas can provide around half the UK primary energy supply in 2020. Richard Wilson, Chairman of OGIA commented: ‘Industry estimates suggest there may be as much as 9bn barrels of oil and gas yet to be found in the UKCS. As the oil majors leave the area this exploration task falls on companies such as the OGIA members. Our members are keen to contribute to the continuing success of the UKCS. However, we believe that a fiscal regime is required that encourages and rewards those prepared to take on the risks of finding and developing the UK’s remaining undiscovered resources. The opposite regime is currently in place.’ ‘With the exception of the DTI, much of government seems to have little understanding of the way oil companies take investment decisions and their concerns about risk,’ he continued. ‘The challenges and opportunities ahead require a coordinated and collaborative approach from government and industry. OGIA believes this joined up thinking can be achieved through the appointment of a Cabinet level, Secretary of State for Energy.’ The UK Offshore Operators Association (UKOOA), too, has called on the UK government to establish a separate department and Secretary of State for Energy with responsibility to develop and provide leadership on energy policy. The trade body states that: ‘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… We need clear and coherent leadership from a single source within government.’