Bosses at French gas giant GDF Suez have raised concerns about the speed of implementation of recommendations made by the Wood Review.
They also said it was “concerning” that the UK government’s consultation on its fiscal review has “been very quiet” as oil and gas firms in the UK wait nervously for confirmation of further government tax incentives.
GDF yesterday officially opened its new offices in Aberdeen which will act as a base for its active North Sea exploration programme as well as its flagship £1.5billion gas project, Cygnus.
Ruud Zoon, who took over the role of managing director of GDF Suez E&P UK in August, said he thought the Wood Review came up with “very good recommendations”.
“But what we are increasingly concerned about is the amount time it takes for the government to implement it,” he said.
“We are not alone in that observation. Everybody has supported the recommendations that Sir Ian made in his report.
“It is taking a long time to see any significant move towards implementation.”
Rob Buchan, GDF’s Aberdeen general manager, said that consultation by the Treasury over possible tax incentives was also a cause for concern as the firm faced slumping commodity prices for gas. The firm confirmed it took a long term view on gas prices as part of a cyclical industry, but pointed out that recent UK government incentives – such as those for high-pressure, high-temperature fields – excluded the sort of fields GDF was developing.
“It has been very quiet,” he said.
“As predominatly a gas player, we would be very happy if the government would be inclined to look at gas in a different way.
“We would favour some form of tax regime that differentiated between oil and gas developments.
“The trouble is these bespoke tax incentives are not really benefiting all the players in an equal way.”
Mr Zoon added: “What we are looking for is tax incentives. The industry was unpleasantly surprised three years ago when taxes were hiked up. There was a shockwave through the industry.
“The North Sea is mature. We have seen oil and gas prices going down. To maintain activity levels in the North Sea it will require in the UK tax incentives.”
Last week BP and GDF revealed a “significant” oil discovery in the Central North Sea, dubbed Marconi/Vorlich.
Mr Zoon said the project was still “early days”. “We are analysing the data. We are not even sure the volume we are looking at. But it is a sizeable discovery and we are excited about it.”
GDF’s Cygnus project, which is part-owned by Centrica and Bayerngas, is expected to contribute 5% of UK gas production at its peak.
The discovery – the largest gas find in the southern North Sea for 25 years – is expected to start producing gas at the end of 2015.
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