Press release

UK's global influence working for North Sea's future

Scotland Office Minister attends Oil and Gas event in Aberdeen.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government


The UK Government is able to combine its global influence and domestic policy to help secure the future of the UK’s oil and gas sector, David Mundell said today.

He was speaking ahead of a speech at an Xcite Energy Dinner in Aberdeen. The firm’s primary focus is to bring the Bentley oil field into commercial production.

The Minister said the combination of innovate UK Government policy for the sector and the UK’s global influence was helping companies exploit opportunities and break down trade barriers, securing

He said:

“The UK Government wants to see more success stories in the North Sea, and that will require more companies that innovate and succeed.

“As a government we will continue to encourage and support companies and investment in the North Sea, and our commitment to the future of the oil and gas sector is stronger than ever.

“There is no doubt that significant reserves of oil and gas remain under the North Sea. But as the industry knows and understands, volumes of reserves do not necessarily equate to profitable recovery nor to increasing revenues for the Exchequer.

“It is over simplistic to claim - as some try to do - that “there’s a trillion barrels or more just waiting to be pumped ashore so don’t worry - the money will keep rolling in.

“The truth is that each barrel gets more expensive to extract. The profits get more marginal. There will still be large fluctuations in commodity prices.”

“We have listened closely to the industry to help maximise recovery of our resources. Our recent Oil & Gas sector strategy demonstrates our long-term commitment and funding to the oil and gas industry, here in Scotland and across the UK. It will help ensure we identify the measures that will benefit business, large, medium or small.

“We are providing the right conditions to make the UK a commercially attractive choice for companies to come here and sustain production – with a system of incentives and tax reliefs worth billions of pounds to keep the North Sea producing oil and gas for the longest possible period.”

Earlier this week, the UK Government announced the start of an independently led review, which will look at how to maximise the economic benefits of offshore oil and gas production. The review will be led by Sir Ian Wood. He will undertake a full analysis, and work with industry leaders, as well as Government, to make recommendations for improving the future economic recovery of UKCS oil and gas. It is the first time for more than 20 years that such a review has been conducted.

On Monday, European Ministers agreed a Directive on Offshore safety. The European Commission’s original proposal was for a regulation which would have been unnecessarily prescriptive, disruptive and costly to implement. The UK Government has been active in lobbying and negotiating on this issue which has seen major outstanding issues resolved.

Extracts from David Mundell’s speech – Xcite Energy Dinner, Aberdeen 13 June

“The UK Government believes that it is imperative that we continue to encourage investment in the UK Continental Shelf. In 2012, the industry invested £11.4 billion capital in the UKCS, the highest in more than 3 decades.

“For the United Kingdom, the Oil and Gas Industry is a vitally important strategic resource – as a contribution to the UK’s energy security – but also as a source of jobs and revenue.

“The United Kingdom can deliver the help required to the Oil and Gas industry over a sustained period to get the most out of the North Sea.

“We can absorb short-term costs for long-term gains; create certainty; and encourage billions of pounds of vital new private sector investment.

“And the clout of United Kingdom can ensure that EU wide regulation is not costly or burdensome.

“Working in partnership, we can ensure the maximum extraction, over the longest period, to the benefit of Scotland and all of the United Kingdom.

“North Sea oil and gas contributes significantly to the supply of our primary energy, and still produces the majority of the UK’s oil and gas needs.

“The primary products of your Industry – the oil and gas itself – will remain an integral part of the UK energy mix for decades to come.

“The UK Government is firmly committed to using our global influence to help companies exploit opportunities and break down trade barriers.

“Exploiting these global markets can safeguard jobs and stimulate growth for the oil and gas supply chain in Aberdeen and rest of the UK.”

Published 13 June 2013