The Press and Journal (Inverness, Highlands, and Islands)
OGA spends £25m in first year of operation
Oil and gas: Industry body aims to ‘reduce cost of the OGA over time’
The Oil and Gas Authority (OGA) has spent £8million of cash raised through an industry levy insix months, according its latest financial report.
The firm, which released its accounts for the year to end of March 2016, revealed OGA's total expenditure was£24.6million. This included a number of oneoff costs including new offices on Huntly Street in Aberdeen and in London.
The once- a- year levy, which was introduced on 1 October 2015, raised £10million from the indust r y. The OGA spent £ 8.2million, leaving £1.8million – which the report said was “refundable to industry”.
The watchdog, which has the power to fine operators up to £1million, has said previously it aims to “reduce the cost of theOGA over time”. It also said that while further government funding has been confirmed for the 2016-17 year, “support for future years will be reviewed annually”.
The majority of its costs – 60% – were due to people, including £ 1.6million spent on temporary staff.
Staff costs totalled £9.1million. Non-executive chairman Sir Patrick Brown was paid £100,000 for 2.5 days a week. Chief executive Andy Samuel's total remuneration was £335,000.
The 74-page report highlighted some of the OGA's successes, including issuing more than 800 operational consents and 400 well consents for companies operating in the UKCS.
The OGA also managed to save a firm £32million after it fast-tracked a consent application, reducing the time required from around eight weeks to just one week.
The report read: “If this work had not been fasttracked it could have delayed production and extended the project schedule. The licensee is estimated to have saved approximately £32million as a result."
The report also outlined a number of risks, which could potentially hinder OGA's progress in its aim of “maximising economic recovery”.
It said: “Many of these risks relate directly to our work with the oil and gas
“Benefited from high levels of constructive feedback”
industry; some concern the ongoing development of our organisation; and others to external factors outside the OGA’s direct control.
“Sustained low oil and gas prices, a domino effect caused by negative profitability and failure to achieve government company milestones are all considered risks.
“Sustained low oil and gas prices during the year caused some companies to cease trading,” the report read. “The risk of further similar situations remains very real."
However, despite the risks and difficult oil price environment, chief executive Andy Samuel said he was “encouraged" by his team's performance.
He added: “In all of our work we have consulted and engaged widely with the industry, the UK and Scottish Governments, investors and civic society, and have benefited from high levels of constructive feedback and support.
“For example, the UK Government funding for new geophysical surveys in under-explored areas of the UKCS was very welcome and the fiscal changes introduced during the year make the UK fiscal regime for upstream oil and gas one of the most competitive in the world." Chairman Sir Patrick Brown wrote in the report that would not comment on the “success” of the regulator’s first year as it was “complicated”.
But he added: “From my point of view, the performance of the chief executive in melding the incoming employees from two cultures into a coherent and effective business was outstanding."