The UK Department of Trade and Industry (DTI) has been revamped and renamed the Department for Business, Enterprise, and Regulatory Reform (DBERR).
Gordon Brown, the new UK prime minister, appointed former Pensions Secretary John Hutton to lead the department. He succeeds Alistair Darling, who has become Chancellor of the Exchequer.
The DBERR will continue to handle energy policy. Oil and gas operators had worried that the department might be broken up and that energy policy would move to the Department for Environment and Rural Affairs, the increasing focus of which has been climate change.
There have been several changes over the past couple of years to the minister of the DTI, raising concerns among North Sea operators about consistency of policy and interest from the government in presenting a coherent energy strategy across all departments. Last November, energy policy became a cabinet level issue for the first time in more than a decade (OGJ Online, Nov. 14, 2007).
A spokeswoman for the Energy Institute told OGJ, “The key to any successful future energy policy is consistency and continuity beyond the parliamentary life cycle or indeed that of any public servant in office, and ideally in being a policy with cross-party support.”
A DBERR spokesman said it was unclear who would assume the position of parliamentary undersecretary of state for energy.
Appointment welcomed
Industry bodies cautiously welcomed Hutton’s appointment and stressed the importance of giving the department adequate resources to deal with the energy agenda, particularly as a large number of relatively small companies have applied for exploration licenses in the UK North Sea.
Richard Wilson, chairman of the Oil & Gas Independents Association, said: “We hope that Hutton will take an interest in PILOT [joint industry-government meetings], and we look forward to close relationships with him and meeting on a regular basis.”
Oil & Gas UK said it looks forward to working with Hutton on maximizing recovery of the UK’s oil and gas reserves.
Industry groups have campaigned strongly to ensure that the government maintains the UK’s attractiveness to energy investment.
According to Jim Hannon, founding partner of North Sea consultancy Hannon & Westwood LLP, it is difficult to envisage any major financial changes in the oil industry under Brown’s new regime, as he was previously the chancellor. Investors are being lured to the UKCS because of high oil prices, and exploration is at its most active since the 1980s. “The Treasury is, therefore, enjoying the best of both worlds: increased tax take and no adverse effect on exploration,” Hannon said.
In its recent Energy White Paper, the government said oil and gas from the UK North Sea will remain important in meeting the country’s energy needs but stressed that nuclear power may have a role in diversifying the energy mix (OGJ Online, June 23, 2007).
According to the paper, the oil and gas share of UK primary energy supply is expected to rise to 80% in 2020 from 70% in 2006.