North Sea oil and gas needs to be profitable to produce if it is going to attract global investment, an event on energy policy was warned in Aberdeen yesterday.
Alec Carstairs, managing partner for Ernst and Young in Aberdeen, said the industry had everything in place from skills and infrastructure to resources on the ground.
But he said if the fiscal regime made investment unprofitable, global companies would redirect trillions of pounds towards searching for and producing oil elsewhere. Speaking at an Oil and gas UK energy policy briefing at Aberdeen Exhibition and Conference Centre, he said the UK had seen more changes to its fiscal regime than possibly anywhere else in the world, including the recent North Sea tax grab.
Mr Carstairs added: “The UK competes on a global stage for funding. In the investment world, location doesn’t matter. Oil and gas will remain a part of our energy supply but the government has to support it.
“The effect of it not supporting oil and gas will be the cost of energy literally going through the roof.
“The biggest question is how do we reduce our consumption. Energy efficiency for me is the number one aim.”
Rob Cross, head of government and regulatory affairs at Norwegian energy firm Statoil, said investment in supplying gas to the UK also depended on government support.
He added: “We have plenty of supplies for Europe, we just need to know where to deliver it and where to invest. We need clear signals from government to do that.”
There was concern among delegates about the cost to generators of building and running gas power plants to produce electricity for when output from power turbines falls.
Simon Less of independent think-tank Policy Exchange said a key energy policy issue were the UK Government’s “unachievable” 2020 renewables targets, which were driving the push to build offshore windfarms. “We should be deploying wind in a way that maximises learning so costs can come down,” he said, adding: “Instead we are putting them up to meet a target regardless of cost.”
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