Unlocking value through new relationships

Offshore Europe 2001

• co-operation between Government and industry

• co-operation between UK and Norway

Iain Todd, DTI

PILOT

• how successful?

• key lessons?

• what next?

PILOT - how successful

• Investment - Capex £3b

• Undeveloped discoveries - impact -

• Competitiveness – LOGIC Awareness 6

– LOGIC Assessments 2

• Technology– ITF Projects 10

– NOVA Grants £1m

£3.5b+

24

30

£20m

8

93

PILOT - how successful

• unquantified– strategic alignment

– trust

– confidence in decision-making

• evaluation – survey by DTI HQ

– independent survey of LOGIC

PILOT - how successful

Chancellor’s statement

“…as we consider the next steps for taxation in the North Sea, our approach will be guided not by short term factors but by the need for a regime that raises a fair share of revenue and promotes long term investment in the North Sea.”

PILOT - key lessons

• time to develop trust• joined-up approach from Government

– importance of other departments

• joined-up approach from industry (ILT)– importance of wide involvement

• communication is key– quarterly meetings with Trade Associations

PILOT - what next?

• Progressing Partnership (Operators)

• Progressing Partnership (Contractors)

• Exploration

Progressing Partnership (Operators)

• licence holding• principles of co-operation• pre-emption• standardised agreements• access to infrastructure• culture and change

Progressing Partnership (Contractors)

• background information on resources

• principles of co-operation

• attractiveness of UKCS

• technology

Cost and value

“It is unwise to pay too much but it’s worse to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. If you deal with the lowest bidder, it is as well to add something for the risk you run. If you do that, you will have enough to pay for something better.”

John Ruskin

Exploration

• means to stimulate exploration on UKCS

• how to make exploration more attractive

• lessons from other provinces

• how to make licensing more efficient

The North Sea dimension

• what are the issues

• what further opportunities exist

Framework of issues

• market liberalisation• harmonisation of standards• research and development• operational synergies• joint-marketing in other countries• greater use of combined infrastructure

(gas transport)

Further opportunities - Government

• continued emphasis on market liberalisation

• continued discussions on treaty issues

• continued work on standards e.g MODU safety case

Further opportunities - industry

• sub-sea power• sub-sea communications • co-operation

– supply vessels

– helicopter

– emergency arrangements