UK Government to boost new regulator with $26M

The UK Government has announced it would contribute short term funding of $26 million (£15 million) over five years to help kickstart the establishment of a new arm’s length regulatory body in the official response to Sir Ian Wood’s review into improving efficiencies in the UK’s offshore oil and gas industry.

UK Government to boost new regulator with $26M
Secretary of State Ed Davey

The Government’s one-off contribution to help fund the new regulator was the only major change to the recommendations, which the Government had already accepted and fast-tracked when the report was first presented in February.

The “UKCS: Maximising Economic Recovery Review” was set up by Secretary of State Ed Davey in June 2013 and detailed how the British economy could receive a potential £200 billion boost over the next 20 years through the recovery of an additional 3-4 billion barrels of North Sea oil and gas, reducing imports and increasing UK energy security.

While in the long term the new Oil and Gas Authority (OGA) will be 100 percent funded by industry, the Government contribution of £3m funding for 5 years from 2016/17 is to demonstrate commitment to the OGA and ensure it is established as quickly as possible.

Secretary of State Ed Davey said: “The Wood Review is good for our energy security, good for the economy and good for jobs.”

“We’ve made a lot of progress in a short amount of time – in six months we have announced the new body will be located in Aberdeen, we’re recruiting for a world-class CEO, and we already have the legislative framework for the new body underway.”

“This pace shows how determined we are to maximise the future potential of the UK’s offshore oil and gas industries which currently employ 450,000 people in the UK. As our Carbon Plan shows, the UK will need oil and gas in the decades ahead as we decarbonise, so it makes economic and energy security sense to produce that domestically.”

Other recommendations formally accepted included a new shared strategy between government, the OGA and industry for maximising recovery of oil and gas in the UK and a greater collaboration by industry in the development of regional hubs, sharing of infrastructure, and reducing the complexity and delays in current legal and commercial processes.

The OGA will undertake the licensing, exploration and development functions work currently carried out by DECC and will have a remit which extends to both onshore and offshore mining.

The Government also believes that the MER UK philosophy established by Sir Ian’s Review should be applied to all oil and gas recovery whether offshore or onshore. The details of how this will be applied onshore will be developed in discussion with industry in due course.

Press Release, July 16, 2014
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