Oil and gas chiefs have welcomed a £15million contribution from the UK Government towards the cost of a new industry regulator.
Trade body Oil and Gas UK (OGUK), which recently complained Westminster was “seeking to absolve itself from all financial involvement”, said last night it was “delighted” by the show of commitment,
The Oil and Gas Authority (OGA), which will be based in Aberdeen, will get £3million annually from the government for five years from 2016-17.
Industry is expected to 100% fund the new regulator over the longer term.
The Department of Energy and Climate Change said its “kick start” reflected its commitment to the new regulator and to seeing it up and running as soon as possible.
Plans for the OGA were announced after Sir Ian Wood, the former chairman of Aberdeen-based energy service giant Wood Group, carried out a major review of the industry on behalf of the government.
His report recommended a new regulator be set up as the current one was “no longer adequate” to meet the challenges of managing an “increasingly complex” sector.
It also outlined how the UK economy could receive a potential £200billion boost over the next 20 years through the recovery of an additional 3-4billion barrels of North Sea oil and gas, reducing imports and increasing UK energy security.
Announcing the government’s OGA funding, Energy Secretary Edward Davey said: “The Wood Review is good for our energy security, good for the economy and good for jobs.
“We’ve made a lot of progress in a short amount of time – in six months we have announced the new body will be located in Aberdeen, we’re recruiting for a world-class CEO, and we already have the legislative framework for the new body underway.
“This pace shows how determined we are to maximise the future potential of the UK’s offshore oil and gas industries.”
OGUK chief executive Malcolm Webb said: “We are delighted to see government commitment to providing a share of the future funding of the OGA.”
It was also an “excellent” demonstration of commitment to the tripartite approach called for by Sir Ian, said Mr Webb, highlighting the report’s recommendation for collaboration between the industry, OGA and Treasury to maximise economic recovery of the North Sea’s oil and gas reserves.
Sir Robert Smith, MP for West Aberdeenshire and Kincardine, said: “Implementing the findings of the Wood Review is fundamental to the future of the North Sea oil and gas industry.
“I am particularly pleased that my Lib Dem colleague Ed Davey has confirmed that the government will contribute funding to help kick-start progress towards the establishment of a new regulatory body.”
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