Energy security 'made a priority'

Image caption,
Chris Huhne was meeting industry representatives in Aberdeen

Britain's offshore oil and gas industry is being put at the heart of Britain's national security, according to the new Liberal Democrat minister in charge of energy and climate change policy.

Chris Huhne, who visited Aberdeen on Thursday, said it was part of the new coalition government's policy of making a priority of energy security.

In a meeting with industry representatives, he came under pressure to reduce the tax and regulatory burden.

Companies claim it is more expensive to exploit North Sea fields as the area becomes more mature. Without tax breaks, he was told investment is likely to go to other basins around the world.

It is reckoned that as much as 25 billion barrels of oil could still be extracted from British waters.

Mr Huhne visited Apache North Sea, which has taken over the Forties field from BP.

Earlier, the new cabinet minister attended the All Energy conference and exhibition in Aberdeen - a showcase for the renewable energy industry.

Following his meeting with oil and gas industry representatives, he said: "This is a vibrant industry but there is no room for complacency.

"There could be 20 billion barrels of oil equivalent left to exploit, but the UK competes against every other basin in the world for investment and I am committed to make sure that we have a licensing regime and investment environment that attracts quality companies and investment to fully exploit the remaining potential.

"Energy security, for too long a second order issue, will be put back at the heart of our national security strategy. The oil and gas sector should take encouragement from that.

"At the same time we have a shortening window for action to prevent the most damaging impacts of climate change.

'Come of age'

Mr Huhne went on: "One of the biggest scandals is that we've got one of the best renewable energy resources anywhere in the world - and the know how to exploit it - and yet we're one of the worst performing countries on harnessing it.

"There are a lot of opportunities in the rapidly expanding renewable energy sector which need to be taken advantage of.

"The expertise and skills that have been vital to the oil and gas sector are transferable and will be key to the renewable energy sector as it develops, and are especially relevant for offshore wind.

"The renewables industry will come of age under this government. It's early days, but our coalition agreement is explicit in its support for the sector."

Malcolm Webb, chief executive of Oil and Gas UK, the industry body, said: "Securing all the investments needed to develop the often smaller, more technically challenging fields will not only demand action from industry to increase efficiency and reduce costs, but it will also ultimately require government to lower production taxes and lighten UK and EU regulatory burden.

"We need to keep working together to improve the UK industry's global competitive position so that it can attract the substantial investment that will be required to explore for and develop the country's estimated remaining 25 billion barrels of oil and gas and keep its successful supply chain anchored here."

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