We are in the midst of a crucial period that will shape the future health of the North Sea.
The Wood Review launch on Monday was at risk of being overshadowed by the political debate so I welcome the invitation to share some initial views two days in.
BG Group greatly values the insight and clarity the Wood Review has brought. I manage BG’s North Sea business, a multibillion-pound operation with 800 employees, and we want to sustain this scale of business over the long term. We enjoy doing business here – it represents over 15% of our global production and provides a source of world-class expertise.
In recent months, however, more and more of my peers have remarked that it has become a difficult and costly place to do business. As the Industry Activity Survey points out today, there are some serious underlying challenges to fix, and quickly. The global competition for capital and skills demands speedy action.
I am extremely keen to see exploration revitalised in the UK, and not just because I am a geologist by background. I was therefore very pleased to see the 12 clear actions laid out by Sir Ian.
Companies collaborating in strategically important areas like the central North Sea – to share data, expertise, rigs and vessels – is completely the right strategy.
On developing new projects, we are already starting to see a strategic regional approach, driven by a shared desire to develop material clusters of fields that will make a real long-term difference to UK energy supply, jobs and tax revenues.
A lot has been discussed about behaviours and the need for companies to provide access to infrastructure in a more co-operative way. We agree with this, recognising that sometimes field developments are simply uneconomic or the infrastructure too old and costly to maintain to allow throughput at any cost.
Having the new regulator attend meetings as a neutral third party will be very helpful. I have already seen this first hand in the last few months, and it works very well for my operations in Norway.
Sir Ian is to be warmly congratulated and thanked for his comprehensive review – swift action is now required to ensure we truly maximise economic recovery across the UKCS. In parallel there is vital work to simplify the tax structure and incentivise more investment.
There are some encouraging signs of progress in this regard and we very much look forward to working with industry and Government to play our part.
Andy Samuel is managing director of BG Group’s Europe E&P business
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