Out-Law News 3 min. read
31 May 2012, 9:19 am
The document (36-page / 2.8MB PDF), which sets out six priorities for the industry in the years until 2020, was unveiled by First Minister Alex Salmond at an industry event in Aberdeen. He also announced that the public economic development body Scottish Enterprise (SE) will make up to £10 million available to support innovation in the sector over three years.
Energy law expert Bob Ruddiman of Pinsent Masons, the law firm behind Out-Law.com, welcomed the strategy which he said recognised the important role that oil and gas continued to play as part of the UK's energy strategy.
"The strategy will allow Scotland to enhance its world class supply chain and create further jobs in a variety of disciplines," he said. "Its publication is yet another reminder that, party politics aside, there needs to be a clear, long-term strategy and energy policy in respect of the whole of the UK."
Oil and gas is the largest industry sector in the UK and is of particular importance in Scotland, where nearly half of the 440,000 jobs in the sector are located. The equivalent of 40 billion barrels of oil worth £300 billion in revenue to the UK Government have been recovered from the North Sea over the past four decades, while the wholesale value of remaining oil reserves is estimated to be as much as £1.5 trillion.
Salmond described the industry as "one of Scotland's greatest industrial success stories" which had a bright future ahead of it.
"The strategy identifies key actions which can maximise future opportunities, for example, by helping the industry secure the necessary human capital and skills, by supporting innovation and technology deployment to boost recovery rates, by assisting more companies into new markets and by delivering investment in key infrastructure," he said.
SE currently supports more than 200 'account-managed' companies in the oil and gas sector, with 175 of those in Aberdeen and the North East. The body provides a range of assistance to the sector including advice on exporting, overseas and other new market research, mentoring and introductions to potential customers. It now aims to encourage a further 100 firms over the next three years in new and emerging areas including decommissioning and carbon capture and storage (CCS).
The strategy calls on the industry to identify clear priorities for innovation and technology deployment with a view to a minimum long-term rise in the amount of resources recovered from the UK continental shelf (UKCS) of 50%. The Scottish Government has committed to a long-term research and development plan and the greater co-ordination of public funds to support this.
In addition to providing domestic supplies the Scottish oil and gas supply chain now records sales in over 100 countries with key partners in North America, West Africa, Brazil, Norway and Australia. The proportion of sales from experts rose from 31 to 46% between 2002 and 2010, with additional significant growth in sub-sectors including subsea, project management and design services in recent years, according to the strategy document.
The document also calls for the continued promotion of Scotland as an oil and gas infrastructure investment destination, and to ensure that the sector continues to attract young people and skills availability through closer liaison between sector employers and education institutions.
"Clearly the industry requires a stable taxation and regulatory regime to provide confidence and encourage long-term investments, something the Scottish Government has consistently supported - indirectly and directly in discussions with ministers in London - and which we will continue to do so in the future," Salmond added. "We will continue to work closely with the sector to deliver excellent services, drive growth and support the ongoing success of an industry that has powered the economies of Scotland and the UK over the last 40 years, and which can continue to be a key driver of prosperity in these islands well into the middle of this century."
Last month Amjad Bseisu, chief executive of the UK's biggest independent oil company EnQuest, said that despite an overall fall in North Sea oil and gas production in recent years the region was likely to remain profitable for at least another 20 years. EnQuest recently announced a $500m investment from the Kuwait Foreign Petroleum Exploration Company (KUFPEC) to develop its Alma and Galia projects.
The Chancellor announced a package of tax measures aimed at increasing investment in UK oil and gas production, including a 'new field' allowance worth £3bn specifically targeted at deepwater drilling west of Shetland, as part of the 2012 Budget.
