A Review of the Nigerian Energy Industry

BP: 'Scotland should stay in UK'

BP 110 September 2014, News Wires – BP chief executive Bob Dudley has said the long-term interests of the North Sea oil and gas industry are best served by Scotland remaining part of the UK.

Dudley’s comments came after former Wood Group chairman Ian Wood claimed on Wednesday Scottish voters were being “misled” by inaccurate nationalist forecasts of Scotland’s oil and gas reserves.

Wood made a plea for realism to take precedence over “fantasy” in the run-up to the 18 September independence vote.

Shell chief executive Ben van Beurden also weighed into the debate again by backing Wood.

Dudley said BP hoped to operate in the North Sea for many years but warned the maturity of the basin meant finds were smaller and more challenging to develop than in the past.

He said: “As a major investor in Scotland – now and into the future – BP believes that the future prospects for the North Sea are best served by maintaining the existing capacity and integrity of the UK.”

He added: “We also face the challenges of extending the productive life of existing assets and managing the future costs of decommissioning.

“Much of this activity requires fiscal support to be economic, and future long-term investments require fiscal stability and certainty.

“Our business invests for decades into the future. It is important our plans are based on a realistic view of the North Sea’s future potential and the challenges the industry faces in continuing to operate here.”

Dudley said in February it was his“personal view” that Scotland splitting from the UK would cause his company “quite big uncertainties”. Today’s comments were issued in a statement on BP’s website.

At a press conference on Wednesday, Wood attacked a recent report by business group N-56, which claimed there could be another 21 billion barrels of oil equivalent to be extracted from unconventional shale reserves in the North Sea.

Wood said: “Quite frankly the N-56 report is an insult to the Scottish people. As passions rise and hearts risk overtaking minds in the debate, it is vital that Scots are able to make their decision based on fact and not fantasy.”

Wood repeated his belief that 15 billion to 16.5 bilion boe of conventional reserves will be recovered from the UK North Sea.

He stressed this view came after he carried out more than 60 interviews with operators and North Sea experts for his UK government-commissioned blueprint for maximising North Sea oil and gas production, published in February.

Industry association Oil & Gas UK believes up to 24 billion boe of conventional reserves remain to be recovered while the UK Office for Budget Responsibility say the figure is nearer 10 billion boe.

Dudley’s counterpart at Shell, Ben van Beurden, meanwhile gave his backing on Wednesday to Wood’s assessment of reserves and to the Wood Review.

Van Beurden said: “The Wood Review is a positive step for the North Sea oil and gas industry, and we strongly support its recommendations of developing a strategy to maximise the economic recovery of reserves remaining in the UK North Sea, and achieving greater collaboration between Government and industry.

“(Sir) Ian Wood is right in his technical assessment that the amount of remaining oil and gas that can be profitably extracted from the UK North Sea is a function of price and cost.

“As existing infrastructure gets older and output falls, costs will go up and tax receipts will come down.

“Furthermore, much of the UK North Sea’s remaining oil and gas – which is yet to be discovered and developed – is in isolated or hard-to-reach areas, which are potentially uneconomic without sharing of existing infrastructure and improved tax incentives.”

A Shell spokesperson said comments made by van Beurden in March that “we’d like to see Scotland remain part of the UK” still stood.


– Upstream

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