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Keep Your Eyes On The Prize

Keep Your Eyes On The Prize

Is this the ‘watershed’ moment for the UK Oil & Gas Industry? The publication of Sir Ian Wood’s final report on maximising recovery from UKCS resources suggests this is a critical time for both Industry and Government to change the way in which they address the challenges of falling production, increasing costs and ageing operating assets.

MER UK (Maximising Economic Recovery from the UKCS) is an expression we will all hear much more of and will require Government (including the Treasury) and Industry to all work together to create a shared strategy to recover the maximum amount of petroleum from UK waters, not just what individual operators can recover from their own licences.

Key to implementing MER UK is the creation of a new independent Regulator to regulate operation of the UKCS. The new Regulator should be properly resourced with experienced staff and have wide ranging powers to ensure compliance with the MER UK principle and to facilitate and promote greater collaboration and co-ordination across the Industry.

In Sir Ian’s own words this is still a ‘win-win’ opportunity – increasing the amount of oil and gas recovered benefits all, but he emphasised that implementation of his recommendations needs to happen as quickly as possible. The initial response from Government is encouraging – it has accepted Sir Ian’s recommendations in full and undertaken to fast–track their implementation.

Sir Ian’s report and recommendations were designed to set the general direction and key changes required. It’s now up to Government, Regulator and Industry to determine the detail – but his review has provided an opportunity to put in place a coherent strategy which will put the UK in a much stronger position to get closer to the 24 billion barrels of oil potentially still out there. A prize worth working for.

Alasdair Freeman
Partner

LChalmers