The Secretary of State for Energy and Climate Change has asked the new chief executive of the Oil and Gas Authority (OGA) to lead an urgent commission to identify key risks to oil and gas production in the UKCS.
Ed Davey said he had asked Andy Samuel to look at what further measures could be taken to help mitigate the impact of low oil prices and high production costs affecting the industry.
The minister made the announcement on a vist to Aberdeen on the same day BP revealed it would be cutting 200 jobs from its North Sea operations and axing 100 contractor roles.
Mr Davey said, “The oil and gas industry is used to volatile prices in world markets and will get through the latest downturn as it has in the past. However, given the huge value of the UKCS to the nation and the relatively high cost base that it has, I am concerned to make sure that it does so in the best possible shape for the future and well placed to deliver our goal of maximising economic recovery as set out by Sir Ian Wood.
“I am therefore today asking Andy Samuel, CEO of the new Oil and Gas Authority, to undertake an urgent piece of work, involving industry, to come up with practical measures to mitigate the immediate risks that the downturn in prices presents us with. There is a lot at stake and I know that industry leaders will lend weight to the work that I have asked Andy to do.”
“I have asked Andy to present his early findings to me by the end of February.”
“The recent sharp reductions in oil prices are very challenging for companies active in the North Sea and that’s why I’m here in Aberdeen today to meet with industry leaders to address the challenges the North Sea industry faces both in the short and longer term as a matter of priority.
“The threat to jobs has been brought home by the news from BP today. We have great sympathy with all those directly affected.
“BP is a significant investor and employer in the North Sea and the UK Government recognises the importance of the North Sea sector, both in terms of thousands of Scottish jobs it supports and its overall benefit to the whole UK economy.”
Andy Samuel was appointed as chief executive of the OGA in November last year following the establishment of the independent body.
Its creation was an integral part of the recommendations made by Sir Ian Wood as part of a review into maximising the UK’s offshore oil and gas resources.
Mr Samuel, formerly BG Group’s managing director, took up his new role last week.
