After news was announced that Aberdeen is to be the HQ for a new independent oil and gas authority, industry experts have already expressed their feelings about the body and what their actions should be.
Spawned out of the recent sector review by businessman Sir Ian Wood, The Oil and Gas Authority will be designed to encourage economic production and provide sustainable support for the industry in the long term.
Recently, the North Sea has seen record levels of investment, with production levels expected to increase by 15% in the next 5 years. Combined with the undercurrent of the Scottish referendum looming, we look at what The Oil and Gas Authority's number one priority should be.
The Northern Lights report by professional services PwC claimed back in April that costs in the North Sea were spiraling out of control.
Despite the opportunity to accumulate £35 billion for all stakeholders and shareholders, PwC warned there was still a lot to do to cement its position as a global oil and gas hub. They pointed towards two main changes:
- Adopting a collaborative working practice to streamline efforts
- Narrow supply chain costs by pooling resources resulting in a £3 billion profit boost
The company also said, "A new vision and new ways of working are urgently required. We believe that, for the UK North Sea to remain competitive, we need to reduce costs significantly - billions of pounds of costs - as well as increase production efficiency. To achieve this, we must engage, collaborate and build trust as an industry."
Clearly from PwC's insightful report, cutting costs must be the priority for the new authority.
Renewable forms of energy are never too far away from the limelight, and planning for the long term future without oil and gas supplies must be high up on the agenda for the new body.
Scottish Renewable Chief Executive Niall Stewart has called for a £1 billion investment in hydroelectric power in the country claiming this would create a sustainable source of energy, and eradicate uncertainty in the renewable energies sector.
Keeping Britain united?
In a strong statement by Chief Secretary to the Treasury, Danny Alexander, the Oil and Gas UK annual conference were told of the news on the authority first.
Describing the sector as being the "jewel in the crown of British industry", Mr Alexander then went on to say, "As an economy, as an industry, there is a UK dividend from staying united. As a United Kingdom we ensure a brighter future for you and your industry".
This battle cry symbolised the desperation of the current government keeping Scotland part of the UK. With considerable revenues waiting to be tapped into, maybe the Oil and Gas Authority's first priority is simply politically motivated for the benefit of the UK tax payers?
Whatever the experts are pitching as the motivations for the authority, or even the responsibilities they should have, it goes without saying that the North Sea has a massive potential which should be nurtured by the new body to ensure jobs are created, revenue is equally shared and the long term future of the energy sector is secured.
Photo Credit: Cicero Group