North Sea licensing to reach record numbers
Awards reflect sector’s buoyancy
THE UK Government is expecting to award a record number of licences in the North Sea as the sector continues to buck the downturn. The Department of Energy and Climate Change announced it was on course to award licences covering around 400 North Sea blocks following the 27th offshore licensing round. A total of 167 new licences have been offered by DECC covering 330 blocks, with a further 61 blocks under environmental assessment.
THEUKGovernmentsaid it is expecting to award a record number of licences in the North Sea, reflecting the sector’s buoyancy amid the economic downturn.
The Department of Energy and Climate Change announced it is on course to award licences covering around 400 North Sea blocks following the 27th offshore licensing round. A total of 167 newlicences have been offered by DECC covering 330 blocks, with a further 61 blocks under environmental assessment.
Describing the round as “the most successful ever in terms of licences”, energy minister John Hayes said it reflected massive interest in the UK.
“It maintains the upward trend and counters some of the misassumptions. There’s amyth the North Sea’s best days are gone but the interest here, the enthusiasm, the potential is immense,” he told The Herald.
The recipients range from small Scottish independents such as Parkmead Group to global giants Royal Dutch Shell. The Anglo-Dutch giant yesterday unveiled its second major proposed investment in theUKNorth Sea this week, with a $525 million (£325m) agreement to buy Hess Corporation’s interests in the 12 Beryl area fields 335 kilometres north-east of Aberdeen and associated infrastructure.
Majors have announced a series of big North Sea investments in recent months. They hope to capitalise on booming demand in countries such as China and advances in technology, which have transformed the economics of some fields.
The increase in activity may show hard-headed oil and gas firms are untroubled by the prospect of a vote for Scottish independence in 2014.
However, the minister said: “All of my experience of Scots teaches me theyareverywise people. Wise people won’t be voting for independence.”
Mr Hayes conceded the surge in applications for North Sea licences may have reflected a global land grab by oil and gas firms. However, he said the success of the licensing round showed the Government was taking the right action to encourage investment.
Asked if the Government had done enough to address concerns following the surprise hike in taxes in the 2011 Budget, MrHayes said the industry had welcomed recent reforms such as the Brown Field investment allowance for existing fields.
“We have reviewed our initial thinking on tax. We have created this Brown Field allowancewhich I think has beenwelcomed by the industry.”
The minister added: “I think we’re in amuch better place… TheGovernment is doing the right things by the industry in terms of licensing issues, the confidence we have and the changes made at the Treasury.”
Mike Tholen, Oil & Gas UK’s economics and commercial director, said: “The record number of licence
applications in this round shows investor confidence is returning after 18 months of constructive engagement with the Treasury.”
However, the industry body said participantsmust ensure interest in licences leads to a recovery in exploration levels.
MrHayes said theGovernment was willing to learn from Norway, which some say provides a more attractive tax regime for exploration than the UK.
Announcing the deal with America’s Hess, Shell said: “The Beryl cluster has a far longer anticipated lifetime than originally thought and may produce for a further two decades.”
It added: “Shell intends to invest in these assets to substantially extend the production life, for potentially a further 20 years.”
On Monday Shell and ExxonMobil confirmed plans to develop the massive Fram field east of Aberdeen. Separately, Fairfield Energy started drilling a well in the Darwin area north-east of Shetland. UNILEVER’S quarterly sales growth beat forecasts as demand for cleaning and personal care products in China helped the consumer goods groupoutshine larger rival Nestle.
Shares in the maker of Dove soap and Cif cleaners climbed yesterday to equal their all-time high as the Anglo- Dutch g roup shrugged off the widespread worries about slowing growth in China.
“It is probably our best quarter out of the past three so it is really very, very good growth throughout our categories,” finance chief Jean-Marc Huet said of the group’s Chinese business, adding thatRussiawas also growing strongly.
MrHuetsaid that themore developedmarkets remained difficult, with the European markets proving “intensely competitive”.
Unilever posted underlying sales growth of 5.9% in the third quarter, ahead of a company-compiled consensus of 5% and a second-quarter rise of 5.8%. Emerging markets, which make up 55% of sales, grew 12.1%.
The group’s performance contrasted with that of Switzerland’s Nestle.
The world’s biggest food group reported slower than expected growth in the first nine months of the year.
Shares of Unilever closed at £23.10, up 45p. Shares of Nestle closed down 0.3%.