| Details: | UK Oil & Gas industry leaders this week wrote to Prime Minister, Tony Blair, urging the UK Government to take a strong position in negotiations with its EU partners over the proposed inclusion of an 'Energy Chapter' in the EU Constitution. The industry has serious concerns that the shared competence in energy policy, as currently drafted, will introduce significant uncertainty and risks for offshore operators. The industry urges that the Chapter be re-drafted to take into account Britain's unique position as the pre-eminent oil and gas producing nation in Europe.
The letter, from the Oil & Gas Industry Leadership Team (ILT), argues that the Energy Chapter will introduce new uncertainties for investors in the UK Continental Shelf (UKCS) at a time when UK operators face both new production challenges associated with the UKCS's mature stage of development, and severe competition for investment capital from new oil and gas provinces worldwide.
The letter, signed jointly by ILT co-chairs Sir Ian Wood, Chairman and Managing Director of John Wood Group plc, and Paul Blakeley, Vice President of Talisman Energy (UK) Ltd, warns of the threat to investment, jobs and, ultimately, the recovery of UKCS oil and gas reserves.
They call on Government to extend the "red line" on EU competence beyond oil and gas fiscal issues to other key areas of oil and gas activity including the licensing regime, the rules and policy guiding operations, decommissioning and governance of infrastructure, security of supply and negotiations with third party countries.
Industry leaders stress that they cannot see how fiscal sovereignty can be disconnected from these issues which are all essential in effective management of the UK's offshore resources and security of supply.
The Oil & Gas industry was surprised to learn that the UK Government does not appear to have considered the potential implications of the proposed Energy Chapter for the UK's oil and gas industry. The UK, represented by the Foreign & Commonwealth Office, has so far chosen not to 'prioritise' energy policy in its negotiations. This is despite the fact that last year the total value of North Sea oil and gas production to the UK economy was £21 billion, directly contributing around £5 billion in tax to the UK Treasury.
Steve Harris, Acting Director General, UK Offshore Operators Association (UKOOA), said on behalf of the ILT:
"The UK Oil and Gas industry is concerned that the FCO appears to have accepted a negotiating strategy that allows a shared competence in energy policy across the board, without recognising the unique position of the UK as the pre-eminent oil and gas producing nation in Europe.
"At this 'mid-life' phase of North Sea oil and gas development, the EU Energy Chapter will introduce new uncertainties and delays which will damage our ability to attract investment from established companies, and deter new entrants, who are the very companies Britain needs to ensure the continued vitality of the North Sea.
"By raising these concerns now, we hope to convince the Government to recognise energy interests as a priority in its negotiations." |
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