At a difficult time for the oil and gas industry when we are addressing a range of challenges including the rapid, steep drop in oil price, we can fully appreciate why Aberdeen City Council has called for an oil and gas summit.
We are well aware of the concerns across the region regarding jobs and the future for businesses in the area and recognise that a summit, which involves the participation of such a wide cross-section of politicians, industry representatives, and trade unions, will focus minds and join effort on what needs to be done to sustain Aberdeen’s position as the oil capital of Europe.
We welcome this positive and collaborative approach, but it is also important to acknowledge the truly constructive work being undertaken by the industry and the Government on a number of fronts to help secure the next phase of development on the UK continental shelf (UKCS).
Earlier this month, Oil & Gas UK welcomed the Government’s plans for North Sea fiscal reform, which included an acknowledgment that the fiscal burden on the industry is too heavy and saw an important first step to reduce that burden. But more will be needed and discussions with the Treasury continue apace.
We are encouraged, however, to note that fiscal policy will now be framed in the context of the sector’s wider economic benefits and will also take account of the global competitiveness of the industry in terms of commodity prices and costs.
It is important to note too that, along with the fiscal reforms, Andy Samuel takes up his new role as Chief Executive of the Oil and Gas Authority (OGA) in January. A crucially important element of the tripartite partnership – with Treasury and Industry – the OGA must move swiftly to implement the recommendations outlined by Sir Ian Wood in the Maximising Economic Recovery Review of the UKCS and deliver more effective stewardship of the UK’s oil and gas resource.
With its enhanced resources and a new charter to facilitate progress in all key areas, the OGA offers us scope for some optimism regarding the future of the North Sea industry. These are positive developments which can help the industry to weather the current economic storm.
Equally, if not more important though, will be the successful delivery on the current industry initiatives to improve efficiency and address our excessively high costs of operation.
All this work, if implemented – and implemented quickly – should mean that the industry is better placed to attract the investment we need to sustain exploration and development in the long term. But we need the full and long-term commitment of national, regional and local government.
In that regard, Oil & Gas UK sees the summit called for by Aberdeen City Council as providing an excellent opportunity to involve all stakeholders in constructive conversations about the long-term needs for Aberdeen to invest in infrastructure to sustain it as the energy capital of Europe.
Progress in that area is needed to help the region compete successfully with other hubs around the world as well as strengthen its resilience in an economic downturn.
Malcolm Webb is the chief executive of Oil & Gas UK
Recommended for you
