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UK Continental Shelf 2014: Stewardship. Partnership. Collaboration.

UK Continental Shelf 2014: Stewardship. Partnership. Collaboration.

As we enter the New Year the oil and gas industry is again making headlines for a number of reasons.

On the positive side, 2013 saw investment in the North Sea reaching its highest level since the boom years of the 1970s (£13.5 billion) with significant investment expected to continue into 2014.

Sir Ian Wood’s recently published interim report sets out recommendations on how to maximise the UK’s offshore oil and gas resources. His report had some headline numbers as well – there’s potential for the industry to produce a further 20 billion or more barrels of oil from the UK Continental Shelf, and increase production by 3 – 4 billion barrels over the coming years which could be worth an additional £200 billion. All in an industry which currently supports the employment of 450,000 people throughout the UK.

The industry also made the headlines in the context of the independence referendum where both sides of the political divide have their views and opinions on what would/could happen to the industry and the UK’s energy resources.

Dig deeper behind the headlines and the industry continues to face a number of challenges:- there continues to be a decline in production; levels of exploration are down which in turn could affect levels of investment in future years; and finding skilled personnel remains an issue.

None of these issues are easily resolved and they still require to be addressed irrespective of the political outcome.  Some of the concepts mentioned following the report might come as a surprise in such a competitive business environment - words such as ‘stewardship’, ‘partnership’ and ‘collaboration’ have been used but 2014 may offer an opportunity for both industry and government to set out more clearly their strategies on how to maximise their long term investment in the UK Continental Shelf for the benefit of both.

We recently hosted a round table discussion on some key issues for long-term success and enjoyed hearing the industry's own views - patience, diligence and compliance, as discussed in the latest issue of the Insider’s Round Table “Oil & Gas Deals”.

Alasdair Freeman
Partner

LChalmers