YPF Expects to Increase Oil, Gas Production in 2013

BUENOS AIRES - Argentina's largest oil company, state-run YPF SA, expects to increase crude and natural-gas production this year as it ramps up spending on exploration and production, YPF Chief Executive Miguel Galuccio said Tuesday.

Argentine President Cristina Kirchner tapped Mr. Galuccio to run YPF shortly after she nationalized the company last year and charged him with reversing years of declining production. YPF managed to increase oil output 2.2% in 2012, while the decline in natural gas production eased to 2.3%.

Mr. Galuccio expects oil production to rise 4% this year, and gas production to increase about 1%.

"For 2013, the challenge is to move to a growth mode, but not growth at any cost. I intend to preserve the profitability of this company and I will have all the [authority] to delay or eliminate projects if needed," he said in a conference call with analysts.

YPF invested 16.48 billion pesos ($3.25 billion) in its operations last year, an increase of nearly 26% from 2011.

YPF has budgeted about $5 billion in capital expenditures this year, and will need to raise about $500 million in additional financing for its investment plan, Chief Financial Officer Daniel Gonzalez said.

YPF's ambitious investment program is starting to bump up against physical constraints.

The company will likely have to bring in drilling rigs from abroad as it runs out of suitable rigs in Argentina, Mr. Galuccio said.

YPF is staking its future on developing Argentina's vast shale-gas and-shale oil deposits.

The South American nation is thought to be home to the world's third-largest shale-gas reserves after the U.S. and China, with some 774 trillion cubic feet of recoverable gas, according to U.S. Energy Information Administration estimates. Argentina is also thought to have significant quantities of shale oil.

But getting those hydrocarbons out of the ground and to consumers and businesses will require billions of dollars that neither YPF nor Mrs. Kirchner's government have on their own.

Last December, YPF signed a deal with a company linked to Argentina's Bulgheroni family to invest $1.5 billion together over the following two years to develop shale-gas and oil resources.

YPF also announced a preliminary agreement that same month with Chevron Corp. that could see the California-based company and YPF spend about $1 billion to drill 100 wells for unconventional energy in Neuquen Province. Chevron has four months to negotiate the final terms and conditions of that agreement.

However, a court-ordered embargo on the assets of Chevron's local subsidiary, stemming from a decades-old case involving environmental-damage claims in Ecuador, has raised questions about Chevron's ability to invest in Argentina. Chevron has said it will use all legal means available to fight the embargo.

"The Chevron deal is moving ahead as expected," Mr. Galuccio said, adding that there will probably be some changes to last year's agreement.

A Chevron spokesman didn't immediately respond to an email and phone calls seeking comment.

Mrs. Kirchner is seeking outside investment and technical expertise to make Argentina energy self-sufficient once again after years of declining production and reserves turned the country into a net energy importer in 2011.

Last May, she formally expropriated a 51% stake in YPF from Spain's Repsol SA in a dispute over investment. Mrs. Kirchner accused the Spanish company of siphoning capital out of YPF and failing to invest enough in its operations.

Repsol has denied those accusations and is seeking about $10 billion in compensation for its YPF shares.

Critics of the government's energy policies say that price caps and export taxes have discouraged investment in the oil and gas sector.

Last November, the Kirchner administration more than tripled the price that YPF can charge for new natural gas production to $7.50 per million British thermal units.

YPF's shares traded in New York were recently 3.5% higher at $15.29, giving the company a market capitalization of about $6.0 billion.

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Norway Oil Fund Expects To Boost China Stock Holdings

OSLO - Norway's $712 billion oil fund expects to significantly increase its Chinese equity holdings this year, Chief Executive Yngve Slyngstad said on Friday, while confirming the fund has applied to increase its $1 billion quota of Chinese A-shares.

"We have a quota of Chinese shares listed in Shanghai or Shenzhen of $1 billion, which has so far been their upper limit," said Mr. Slyngstad in an interview with Dow Jones Newswires. "Now they [the Chinese authorities] have changed this, and removed the upper limit for state-owned funds such as ours."

The oil fund, officially titled the Government Pension Fund Global, is the world's largest sovereign wealth fund and is derived from Norway's oil profits. In 2012, the fund became the first international investor in China to be awarded the maximum quota of $1 billion A-shares.

According to Mr. Slyngstad, Chinese authorities last year increased the total equity investment quota for all foreign investors to $80 billion from $30 billion. He added that as far as he was aware, China hasn't started awarding individual new quotas yet.

"We expect that when they start assigning quotas, we will get a significant share of those, and in that respect we can expect our investments in Chinese equities to be significantly higher at the end of 2013," Mr. Slyngstad said, adding that "we have already applied."

He wouldn't elaborate on how much extra the fund would invest in China. The fund's Chinese equity investment stands at 1.6% of its total NOK2.335 trillion ($410 billion) equity portfolio, representing its biggest holding in an emerging market. At the end of 2012, the fund owned shares in 303 companies in China.

The oil fund said Friday that its equity investments in China, the world's second-largest economy, returned 13% in 2012.

In a major strategic change last year, Norway decided to shift a larger share of the oil fund's assets into emerging markets to reduce long-term risk by tapping into the world's fastest-growing regions. The change of direction was requested by the country's central bank, which manages the oil fund on behalf of the government.

"Norges Bank has clearly expressed an ambition to spread investments and become stronger in emerging markets," Norway's central bank Governor Oystein Olsen told Dow Jones Newswires Friday.

"China is an economic giant globally, which suggests a substantially bigger weight in the portfolio in the future," he added.

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BP Expects Some US Gulf Oil Spill Claims To Be Higher Than Anticipated

LONDON - BP PLC now expects to pay more than previously anticipated in compensation for private economic and property damage stemming from the Deepwater Horizon disaster in the Gulf of Mexico, according to the company's annual report.

This is because average payments for business economic loss claims so far have been higher than anticipated, the company said. BP said this means it can no longer give a reliable estimate for the total cost of the settlement it agreed last year with the plaintiffs' steering committee--a group representing individuals with economic, property or medical damage claims--other than to say it will be significantly higher than $7.7 billion.

In a speech earlier this week BP Chief Executive Bob Dudley said the company has spent over $24 billion in response, including clean-up and restoration costs and in payments on claims made by individuals, businesses and governments for the 2010 disaster. This latest escalation in the cost of the disaster, which killed 11 men and triggered the worst offshore oil spill in U.S. history, comes as the company is embroiled in a civil trial to determine environmental fines that could total as much as $17.6 billion.

BP has spent or provisioned more than $40 billion for the Deepwater Horizon disaster, Mr. Dudley added.

BP said the final cost of the PSC settlement is likely to be higher than $7.7 billion, which is the company's current estimate of total payments under the deal, excluding future claims for business economic loss whose size cannot now be determined.

In February BP revised up the cost of the PSC settlement to $8.5 billion--already an increase from the original estimated cost of $7.8 billion last year--but it has now withdrawn that guidance. The company said it would issue fresh guidance for the higher costs when it is able to calculate a reliable new estimate.

BP said it can't give an estimate for the final total of compensation payments to individuals and businesses. "Management has concluded that no reliable estimate can be made of any business economic loss claims not yet received or processed," BP said.

BP said costs were higher because the administrator of the compensation fund was using a more generous interpretation of the payout agreement, resulting in higher number and value of awards than BP had assumed in their initial estimate.

This week a U.S. federal court affirmed the administrator's interpretation of the economic and property damages settlement agreement. BP said it disagrees with the ruling and will challenge it.

However, the U.K.-listed oil giant said that even if it is successful in appealing the court's ruling, the total cost of the settlement agreement will still exceed $7.7 billion. "If BP is not successful in its challenge to the court's ruling, a further signi?cant increase to the total estimated cost of the settlement will be required," BP said.

The company is now in the second week of a civil trial in New Orleans to apportion blame for the 2010 accident. A second trial, scheduled for the fall, will determine how much oil leaked into the Gulf of Mexico. The two trials will determine the size of the fines BP could face under the U.S. Clean Water Act, which could total as much as $17.6 billion

BP has said these fines should be a maximum of $3.4 billion.

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Total Expects to Restart Elgin within a 'Very Few Days'

Total expects to restart production from the Elgin and Franklin fields in the North Sea within "a very few days" after the UK's Health and Safety Executive (HSE) announced Wednesday this week that it had given the go ahead for production to resume on the company's Elgin platform. The Elgin platform was shut down almost a year ago, on March 25, 2012, after a major gas leak.

A spokesman for Total told Rigzone following the HSE announcement:

"Now that the HSE has accepted the safety case we will be looking to restart safe production at Elgin as soon as it's practical to do so, which we hope will be within a very few days."

The spokesman added that Total would make an announcement once production has resumed.

The resumption of gas production at Elgin is much needed by the UK's energy infrastructure at the moment. UK energy regulator Ofgem warned Feb. 19 that a dwindling of foreign gas supplies was among the factors contributing to "uncomfortably tight" energy reserves in the country.

At the time of the leak incident in March last year, the Elgin and Franklin fields were producing around 9 percent of total UK gas production. At their peak the two fields can produce up to 280,000 barrels of oil equivalent per day (boepd), according to Total.

Once resumption begins Elgin/Franklin will reach 70,000 boepd – only half its pre-shutdown output of 140,000 boepd – by the end of this year and that it will not reach its full output until 2015, warned Patrice de Vivies, Total's senior vice president of exploration and production for Northern Europe, in February.

The restart of production should also eventually see the full complement of more than 230 personnel who work on the platform return to duty.

Total had hoped that production on the Elgin platform would resume by the end of 2012, but the HSE took longer than expected to decide if it was safe to resume production. Indeed, there was concern that the resumption of production might be delayed further when an HSE spokesman said March 1 that the safety regulator was still assessing the case for the Elgin restart and that the matter was "complex".

Total shut down and evacuated non-essential personnel from the Elgin March 25, 2012 after a sheen of gas was reported within the vicinity of the platform.

The firm soon performed a "dynamic kill" well-intervention operation – using the West Phoenix (UDW semisub) rig – that involved pumping heavy mud into the well that had leaked, which was achieved in May. A lengthier process to seal the well with cement was completed in autumn.

Total stated in August last year that the overall environmental impact of the gas leak incident at Elgin was "minimal", with 3,096 tons of natural gas and 3,076 tons of condensate being lost because of the leak. Most of this evaporated in the atmosphere, the firm said, while the sheen – representing some 407 tons of condensate – dispersed naturally into the sea.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Total Expects Elgin-Franklin Field to Restart Soon

LONDON - Total SA expects to get the go-ahead in the next few days to restart operations at its Elgin-Franklin gas field in the North Sea after last year's gas leak, an event with significance for the company and the U.K. economy.

Restarting production at the field is important for Total, which missed production targets in 2012, while Elgin-Franklin contributed around 9% of the U.K.'s oil and gas production before the shutdown. The timing of its restart has particular importance as the country's economy teeters on the brink of its third recession in five years.

North Sea oil and gas production shutdowns played havoc with U.K. economic output last year, and economists say the resumption of production at several closed fields, including Elgin-Franklin, would make a significant positive contribution to U.K. gross domestic product in the first quarter.

Extractive industries, which include mining and quarrying but to which North Sea oil and gas contributes the vast bulk, contribute 2.4% of total U.K. GDP, according to the Office for National Statistics. The U.K. economy shrank 0.3% between October and December, a decline the ONS said was mostly caused by the closure for maintenance of the Buzzard oil field, the North Sea's largest, for much of that period.

"What's important is to restart Elgin-Franklin now as soon as we can...not only because we need the production, not only because the U.K. needs the production, but to say that it's been managed in a proper way," Total's chief executive Christophe de Margerie said at a briefing in London.

Still, the ramp-up in production from Elgin-Franklin and other associated fields will be slow. Total's Senior Vice President of exploration and production for Northern Europe, Patrice de Vivies, said the field will reach only half its pre-shutdown output of 140,000 barrels equivalent of oil and gas a day in 2013, and won't reach full output until 2015.

Total can't restart the field until it gets approval from the U.K's Health and Safety Executive, or HSE, which regulates offshore oil and gas installations. A spokesman for the body said it is reviewing the company's proposal, which it received at the end of November and has 90 days from then to consider.

The HSE spokesman declined to discuss its continuing investigation into the incident.

The gas leak on the Elgin platform, which is 240 kilometers, or about 150 miles, east of Aberdeen in Scotland, wouldn't happen at other North Sea oil and gas platforms or Total's operations elsewhere because it was the result of unique circumstances, said Mr. de Vivies.

The leak occurred when bromide used in fluid pumped into oil wells during the completion of drilling chemically reacted with grease used on the drill casing, causing corrosion "cracking" that allowed gas trapped in rock above the main Elgin reservoir to seep to the surface.

"It was a unique type of corrosion not linked to aging. We haven't changed procedures elsewhere because it was unique to Elgin," Mr. de Vivies said.

The HSE spokesman declined to talk about its continuing investigation into the incident.

Safe operations at oil platforms are in sharp focus following BP PLC's Deepwater Horizon disaster in April 2010, which resulted in 11 deaths and became the worst offshore oil spill in U.S. history.

Jason Douglas contributed to this article.

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Zeta Expects Jimbolia-100 Well to Hit Target Depth in 5 Days

Romania-focused Zeta Petroleum reported Thursday that the operator of the Jimbolia oil concession in Romania, NIS Petrol SRL, has advised it that the Jimbolia-100 appraisal well has now been drilled to its second casing point depth of 7,887 feet (2,404 meters). Casing has been run and cemented to a depth of 7,845 feet (2,391 meters).

Zeta said that, subject to confirmation of a successful cementing job, the well will be logged before drilling through the targeted oil reservoir and ahead to the target depth of 8,497 feet (2,590 meters). It is expected that the target depth will be reached within the next five days, with a further 15 days required to complete logging and testing operations. If successful, Jimbolia-100 will be completed as a production well.

The well is targeting the Jimbolia Veche oil discovery, which has two hydrocarbon-bearing intervals and a current mean contingent resource of 1.7 million barrels.

Zeta holds a 39-percent stake in the concession.

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Lundin Expects to Produce up to 38,000 boepd in 2013

Sweden's Lundin Petroleum said Monday that it expects to produce between 33,000 and 38,000 barrels of oil equivalent (boepd) per day during 2013.

Releasing an update on its 2P reserves, Lundin CEO Ashley Heppenstall said that the firm expects to exit 2013 with a production rate of 40,000 boepd after its Brynhild field, offshore Norway, comes on stream later this year.

Lundin's 2P reserves are now 201.5 million barrels of oil equivalent, which is down from the 210.7 million barrels reported for the end of 2011. The firm said its 2P reserves have been positively affected by its Bertam field, offshore Malaysia, which has been added to the figure. Further increases resulted from Lundin's main producing assets – the Alvheim and Volund fields, offshore Norway – as well as the Brynhild field.

However, Lundin pointed out that these additions were offset by reserves reductions predominantly on the Gaupe gas/condensate field offshore Norway and producing assets in the Komi Republic in northern Russia.

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Rosneft Expects 2013 Output to Increase by 1%-2%

MOSCOW - OAO Rosneft expects to increase its output by between 1% and 2% in 2013 mainly due to production growth at its giant Vankor field in Siberia, the company said Friday as it reported its 2102 full year earnings.

In a conference call Dmitry Avdeev, the vice president for finance and economics, said he expects crude oil production from Vankor to reach between 430,000 barrels and 440,000 barrels per day, although he neither confirmed nor denied that oil production at the company's other main fields could decline.

Vankor was the main contributor to Rosneft's oil output growth of 2.5% to 2,43 million barrels a day in 2012 amid declining output at the company's other main fields.

Higher output and higher oil prices led to a 13% rise in revenue for the year to 3.08 trillion rubles ($102 billion) and a 7.2% rise in net profit to RUB342 billion.

However, the profit figure fell well below market expectations. "Reasons for such results are not exactly clear. There is an item called 'other expenditures' which unfortunately the company does not disclose," said Alexander Kornilov, an analyst with Alfa Bank, who called the results "disappointing".

The market is also worried by a sharp drop in free cash flow, which dropped to RUB45 billion for the full year from RUB99 billion a year before, partly due to increased investment and lower income from operations. Shares in the company closed down 2.1% RUB261.5 in Moscow, underperforming the wider index which was flat on the day.

Rosneft is buying competitor TNK-BP from BP PLC and its partners in a deal worth $50 billion that will create the world's largest traded oil producer. BP will increase its stake in Rosneft to 19.8% as part of the deal.

Mr. Avdeev said antitrust bodies in Russia and Ukraine have already approved the deal, and that the purchase, which is fully funded, is going ahead as planned.

To finance the purchase of the stake from BP, Rosneft has agreed to borrow $16.7 billion from international banks, the company said in its earnings report.

Mr. Avdeev added that the oil giant may also place a Eurobond later this year, as last year's debut issue showed "a very strong demand". He added that the company would hit the international bond market after considering the attraction of this instrument compared to domestic bonds, direct loans, or contracts with trading companies.

The company's net debt stood at RUB581 billion at the end of the fourth quarter compared to RUB542 billion at the end of the previous quarter, as Rosneft is yet to draw the agreed loans.

However, the acquisition of TNK-BP dented Rosneft's Earnings before interest, taxation, depreciation and amortization, or Ebitda, due to an increase in spending on audit and consulting services.

The company's Ebitda margin, the measure used to judge a company's profitability, dropped to 19.8% in 2012 from 24.4% in the previous year.

Mr. Avdeev said the company is aiming at paying dividend at 25% of its full-year profit, as announced before.

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Rosneft Expects 2013 Output to Increase by 1%-2%

MOSCOW - OAO Rosneft expects to increase its output by between 1% and 2% in 2013 mainly due to production growth at its giant Vankor field in Siberia, the company said Friday as it reported its 2102 full year earnings.

In a conference call Dmitry Avdeev, the vice president for finance and economics, said he expects crude oil production from Vankor to reach between 430,000 barrels and 440,000 barrels per day, although he neither confirmed nor denied that oil production at the company's other main fields could decline.

Vankor was the main contributor to Rosneft's oil output growth of 2.5% to 2,43 million barrels a day in 2012 amid declining output at the company's other main fields.

Higher output and higher oil prices led to a 13% rise in revenue for the year to 3.08 trillion rubles ($102 billion) and a 7.2% rise in net profit to RUB342 billion.

However, the profit figure fell well below market expectations. "Reasons for such results are not exactly clear. There is an item called 'other expenditures' which unfortunately the company does not disclose," said Alexander Kornilov, an analyst with Alfa Bank, who called the results "disappointing".

The market is also worried by a sharp drop in free cash flow, which dropped to RUB45 billion for the full year from RUB99 billion a year before, partly due to increased investment and lower income from operations. Shares in the company closed down 2.1% RUB261.5 in Moscow, underperforming the wider index which was flat on the day.

Rosneft is buying competitor TNK-BP from BP PLC and its partners in a deal worth $50 billion that will create the world's largest traded oil producer. BP will increase its stake in Rosneft to 19.8% as part of the deal.

Mr. Avdeev said antitrust bodies in Russia and Ukraine have already approved the deal, and that the purchase, which is fully funded, is going ahead as planned.

To finance the purchase of the stake from BP, Rosneft has agreed to borrow $16.7 billion from international banks, the company said in its earnings report.

Mr. Avdeev added that the oil giant may also place a Eurobond later this year, as last year's debut issue showed "a very strong demand". He added that the company would hit the international bond market after considering the attraction of this instrument compared to domestic bonds, direct loans, or contracts with trading companies.

The company's net debt stood at RUB581 billion at the end of the fourth quarter compared to RUB542 billion at the end of the previous quarter, as Rosneft is yet to draw the agreed loans.

However, the acquisition of TNK-BP dented Rosneft's Earnings before interest, taxation, depreciation and amortization, or Ebitda, due to an increase in spending on audit and consulting services.

The company's Ebitda margin, the measure used to judge a company's profitability, dropped to 19.8% in 2012 from 24.4% in the previous year.

Mr. Avdeev said the company is aiming at paying dividend at 25% of its full-year profit, as announced before.

Copyright (c) 2012 Dow Jones & Company, Inc.

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UK Energy Secretary Expects 28 New Fields on UKCS in 2013

The UK Secretary of State for Energy and Climate Change Ed Davey confirmed at a meeting in Parliament Wednesday night that the government expects around 28 new oil and gas fields on the UK Continental Shelf to get approval this year, following the approval of 29 projects in 2012.

Speaking at the British Oil & Gas Industry All Party Parliamentary Group at its annual reception at Westminster Palace, which was attended by Rigzone, Mr Davey reiterated the UK government’s support for the UK oil & gas industry.

"Oil and gas will form an integral part of the UK energy mix for decades to come. Over 70 percent of the UK's primary energy demand may still be filled by oil and gas into the 2040s. With 20 billion barrels or more still to be drawn from the UK’s North Sea fields, having an indigenous source helps prevent overreliance on imports from more volatile parts of the world," Mr Davey said.

"So the UK oil and gas industry is a vitally important strategic resource now and over the next half century, to help fulfill our energy needs and as a contribution to the UK’s energy security."

Davey illustrated how the UK government has been acting to encourage investment and innovation in the oil and gas sector.

"Introducing, for instance, new field allowances West of Shetland; extending the small fields allowance; and putting in place new allowances for shallow-water gas fields."

The result of this has seen the level of investment in new oil and gas fields increase significantly in recent years, the Energy Secretary pointed out.

"The level of investment in new oil and gas projects sanctioned in 2011 was over 10 times the amount of 2009. 18 projects with a total value of $20.5 billion (GBP 13 billion) were approved. In 2012, 29 projects [were] approved with capital expenditure of over $17.3 billion (GBP 11 billion). In 2013, we are already expecting around 28 new fields to get approval."

Also at the meeting was Oil & Gas UK Chief Executive Malcolm Webb, who commented in his own speech: "We welcome the Coalition government’s new long-term approach to the UK oil and gas industry which is already reaping rewards for the British economy... With improvements to the tax regime as a result of better engagement with the Treasury, no less than 30 new offshore oil and gas developments were approved in the last twelve months.

"Furthermore, 167 new licences to explore for petroleum in UK offshore waters were awarded in the latest licensing round. This upturn is set to continue and presents excellent business opportunities right across our world-class supply chain to the benefit of the UK’s energy security, balance of trade and tax revenues. Most importantly at this time however, it has, as predicted, resulted in thousands of new and well paid jobs."

Statoil said in December that its recent decision to go ahead with its $7 billion-plus Mariner heavy oil field in the UK North Sea was positively affected by the expansion of the UK's Ring Fence Expenditure Supplement – a measure taken by the UK government to support investment in marginal fields.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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UK Energy Secretary Expects 28 New Fields on UKCS in 2013

The UK Secretary of State for Energy and Climate Change Ed Davey confirmed at a meeting in Parliament Wednesday night that the government expects around 28 new oil and gas fields on the UK Continental Shelf to get approval this year, following the approval of 29 projects in 2012.

Speaking at the British Oil & Gas Industry All Party Parliamentary Group at its annual reception at Westminster Palace, which was attended by Rigzone, Mr Davey reiterated the UK government’s support for the UK oil & gas industry.

"Oil and gas will form an integral part of the UK energy mix for decades to come. Over 70 percent of the UK's primary energy demand may still be filled by oil and gas into the 2040s. With 20 billion barrels or more still to be drawn from the UK’s North Sea fields, having an indigenous source helps prevent overreliance on imports from more volatile parts of the world," Mr Davey said.

"So the UK oil and gas industry is a vitally important strategic resource now and over the next half century, to help fulfill our energy needs and as a contribution to the UK’s energy security."

Davey illustrated how the UK government has been acting to encourage investment and innovation in the oil and gas sector.

"Introducing, for instance, new field allowances West of Shetland; extending the small fields allowance; and putting in place new allowances for shallow-water gas fields."

The result of this has seen the level of investment in new oil and gas fields increase significantly in recent years, the Energy Secretary pointed out.

"The level of investment in new oil and gas projects sanctioned in 2011 was over 10 times the amount of 2009. 18 projects with a total value of $20.5 billion (GBP 13 billion) were approved. In 2012, 29 projects [were] approved with capital expenditure of over $17.3 billion (GBP 11 billion). In 2013, we are already expecting around 28 new fields to get approval."

Also at the meeting was Oil & Gas UK Chief Executive Malcolm Webb, who commented in his own speech: "We welcome the Coalition government’s new long-term approach to the UK oil and gas industry which is already reaping rewards for the British economy... With improvements to the tax regime as a result of better engagement with the Treasury, no less than 30 new offshore oil and gas developments were approved in the last twelve months.

"Furthermore, 167 new licences to explore for petroleum in UK offshore waters were awarded in the latest licensing round. This upturn is set to continue and presents excellent business opportunities right across our world-class supply chain to the benefit of the UK’s energy security, balance of trade and tax revenues. Most importantly at this time however, it has, as predicted, resulted in thousands of new and well paid jobs."

Statoil said in December that its recent decision to go ahead with its $7 billion-plus Mariner heavy oil field in the UK North Sea was positively affected by the expansion of the UK's Ring Fence Expenditure Supplement – a measure taken by the UK government to support investment in marginal fields.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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UK Energy Secretary Expects 28 New Fields on UKCS in 2013

The UK Secretary of State for Energy and Climate Change Ed Davey confirmed at a meeting in Parliament Wednesday night that the government expects around 28 new oil and gas fields on the UK Continental Shelf to get approval this year, following the approval of 29 projects in 2012.

Speaking at the British Oil & Gas Industry All Party Parliamentary Group at its annual reception at Westminster Palace, which was attended by Rigzone, Mr Davey reiterated the UK government’s support for the UK oil & gas industry.

"Oil and gas will form an integral part of the UK energy mix for decades to come. Over 70 percent of the UK's primary energy demand may still be filled by oil and gas into the 2040s. With 20 billion barrels or more still to be drawn from the UK’s North Sea fields, having an indigenous source helps prevent overreliance on imports from more volatile parts of the world," Mr Davey said.

"So the UK oil and gas industry is a vitally important strategic resource now and over the next half century, to help fulfill our energy needs and as a contribution to the UK’s energy security."

Davey illustrated how the UK government has been acting to encourage investment and innovation in the oil and gas sector.

"Introducing, for instance, new field allowances West of Shetland; extending the small fields allowance; and putting in place new allowances for shallow-water gas fields."

The result of this has seen the level of investment in new oil and gas fields increase significantly in recent years, the Energy Secretary pointed out.

"The level of investment in new oil and gas projects sanctioned in 2011 was over 10 times the amount of 2009. 18 projects with a total value of $20.5 billion (GBP 13 billion) were approved. In 2012, 29 projects [were] approved with capital expenditure of over $17.3 billion (GBP 11 billion). In 2013, we are already expecting around 28 new fields to get approval."

Also at the meeting was Oil & Gas UK Chief Executive Malcolm Webb, who commented in his own speech: "We welcome the Coalition government’s new long-term approach to the UK oil and gas industry which is already reaping rewards for the British economy... With improvements to the tax regime as a result of better engagement with the Treasury, no less than 30 new offshore oil and gas developments were approved in the last twelve months.

"Furthermore, 167 new licences to explore for petroleum in UK offshore waters were awarded in the latest licensing round. This upturn is set to continue and presents excellent business opportunities right across our world-class supply chain to the benefit of the UK’s energy security, balance of trade and tax revenues. Most importantly at this time however, it has, as predicted, resulted in thousands of new and well paid jobs."

Statoil said in December that its recent decision to go ahead with its $7 billion-plus Mariner heavy oil field in the UK North Sea was positively affected by the expansion of the UK's Ring Fence Expenditure Supplement – a measure taken by the UK government to support investment in marginal fields.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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