The U.K. Department of Trade and Industry (DTI) has announced new measures aimed at boosting U.K. offshore oil and gas exploration and development.
While the measures fall short of operators' requests for a lighter taxation regime, they include streamlined licensing rules and a chance to postpone spending on some drilling commitments.
The new measures were formulated by a joint government and industry task force, chaired by Energy and Industry Minister John Battle. The group's mission is to help sustain U.K. offshore activity at a time of low oil prices.
Key changesAnnouncing the new measures, Battle said the task force had suggested key changes to DTI's system for exploration and production licensing, and would continue to examine ways to make U.K. oil and gas production more competitive.
"These early changes," said Battle, "are expected to cut red tape and streamline the regulatory process, so as to lower costs, provide encouragement for new exploration, and help to maintain production in fields already developed, while retaining our full commitment to the environment.
"Discussions are continuing in the task force, with the aim of bringing forward further measures, and I am optimistic that we can help to restore the long-term momentum of the U.K. continental shelf despite difficult world trading conditions, through changes such as these, as well as technical innovation and the best use of U.K. skills and resources."
New measures include:
- Annual licensing rounds, each covering half of the available unlicensed acreage.
- The potential to transfer work obligations on existing licenses onto new licenses nearby.
- Longer production consents.
- Streamlined development plan requirements.
- Approval of most development plans within 1 month.
Industry respondsThe U.K. Offshore Operators Association (Ukooa) welcomed the changes and said it looks forward to similar positive outcomes for other key areas that are under review by the task force.
James May, director general of Ukooa, said, "This initial package of measures is a promising start to the work of the task force, and it is encouraging that the collaboration is yielding positive results after only three meetings."
The Association of British Independent Oil Exploration Com- panies (Brindex) acclaimed Battle's announcement as a step along the road towards ensuring that the U.K.'s oil and gas sector remains a competitive place in which to invest.
Brindex Chairman Mark Hope said, "A combination of low oil prices and the maturity of the U.K. continental shelf, which means that new field discoveries are generally small and often complex, makes it difficult for the U.K. to compete in the face of intense competition from lower-cost international areas, where field sizes can be much larger."
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