The prime minister’s acceptance of Sir Ian Wood’s radical review of the oil and gas industry will mean big changes for companies operating in the North Sea.
Firms which refuse to work together to maximise oil recovery could ultimately be stripped of their licences under plans contained within the Wood Review.
He is pushing for big changes in the way the industry goes about its business – and a powerful new body to govern the industry. He said his interim findings found evidence of firms cutting investment in infrastructure for short-term gain – and also of firms with a “predisposition” not to collaborate with others.
“Operators have brought many of the problems on themselves,” he says. “Evidence given to the review clearly indicates the frustration and concern expressed by companies of all sizes on the negative impact of commercial behaviours.”
He adds: “A lack of co-operation and collaboration across industry has increased costs, caused delays, and led to poorer recovery.
The review has found more than 20 instances in the last three years where the inability of operators to agree terms for access to processing and transport infrastructure has led to significant delays or in some cases stranded assets.”
The current regulatory bodies have limited scope to step in. But Sir Ian is asking for major new dispute resolution powers.
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