Oil & Gas UK Annual Review 2013

ANNUAL REVIEW 2013

Chief Executive’s Foreword

2013 was another memorable year for Oil & Gas UK. In this Annual Report we give you a summary of how the association has been working on behalf of its members, now numbering over 400, with more joining every week. At the three-day Piper 25 Conference held in June we were honoured to welcome Lord Cullen back to Aberdeen to deliver the keynote address. More than 1,500 representatives of management, workforce, regulators and academia, from this country and abroad, came to remind ourselves of the awful lessons of the Piper Alpha disaster, in which 167 men lost their lives. It was a chance to rededicate ourselves to the cause of continuous improvement on safety offshore and onshore. The tragic Sumburgh helicopter crash in August in which four industry colleagues lost their lives is a stark reminder why this must continue to be our top priority. I see a rejuvenation process underway with regard to operational goals and involving a renewed commitment by government and industry to the future of oil and gas operations on the UKCS and the supply chain which serves those operations. The Coalition Government has taken significant and positive steps since 2011. New and much needed field allowances have significantly boosted activity and capital investment will reach an all-time record of £13.5 billion this year. The much needed certainty which the Treasury has now provided on decommissioning tax relief is a huge and important step forward to repair and improve investor confidence. This should result in significant additional funds for future investment. Furthermore the industrial strategies launched by the UK and Scottish governments set a strong framework for increased investment, improved application of new technology, growth in exports of goods and services. As a result, yet more jobs will add to the 450,000 which

this sector supports throughout the UK. One important output from this new strategy, which we will deliver in spring 2014, will be the first comprehensive UK supply chain map of our industry. Indeed I am pleased to say that your association has played the lead role for the industry in all of the above matters. But there is much more that needs to be done. Exploration has been very disappointing recently. Despite impressive investment in new developments, the production efficiency of existing assets has been in worrying decline, with a number of fields failing to produce as well they should. So we were also encouraged when, in June, when the Rt Hon Edward Davey MP, the Secretary of State for Energy and Climate Change, commissioned Sir Ian Wood to conduct an independently led review concerned with maximising the recovery of the UK’s offshore oil and gas resources. Again we have been constructively engaged with this review and agree with Sir Ian’s central recommendations. These include the need to improve industry collaboration and regulatory effectiveness, principally through the adoption within production licences of a requirement to act to maximise the economic recovery of the UKCS oil and gas resource and the creation of a new and better resourced regulatory body. Oil & Gas UK is a member-focused, member-led industry association and so we continuously look for your input, advice and support. Our agenda must be set by and for our members. Thank you for your support and contribution over the course of 2013. We look forward to working with and for you in 2014.

Malcolm Webb

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