MINISTERIAL FOREWORD

FOREWORD

By Peter Hain MP, Minister for Energy and Competitiveness in Europe
(n.b. - following the General Election in June 2001, Mr Hain left DTI, and Brian Wilson joined as Minister for Industry and Energy)

There is no doubt that oil and gas continue to be an essential element in meeting the UK’s energy needs. They represent around 85% of the nation’s primary energy production, and have accounted for some 18% of UK industrial investment over the last decade.

Many opportunities still remain for companies wishing to explore and develop on the UK Continental Shelf (UKCS). 126 million tonnes of oil and 115 billion cubic metres of gas were produced in the UK during 2000, ensuring that combined production continued at peak levels. Exploration and appraisal activity increased, and 11 new field developments and 12 incremental projects were approved. Helped by the initiatives emerging from the work of PILOT, successor to the Oil and Gas Industry Task Force, which I chair, and stronger oil prices, the industry demonstrated renewed confidence last year, with major operators announcing enhanced future UK investment intentions. And PILOT continues to provide an excellent vehicle for identifying the key issues facing the industry now and in the future, and agreeing what to do about them.

So, all in all, a good year for UK activity? Yes, but no grounds for complacency. There is a continuing need to encourage further investment and activity and to find new ways to maintain and enhance the competitiveness of the industry. We must engage all parts of the industry - Government, major operators, independents and contractors, in identifying and dealing with barriers to progress in these areas. In particular it is vital to ensure targeted efforts towards the exploitation of all our oil and gas reserves - this includes the development of smaller UKCS fields, and specialist technology has an important role to play here.

PILOT continues to bring forward initiatives in areas such as developing brown fields, fallow blocks and undeveloped discoveries, facilitating licence asset trading, enhancing supply chain competitiveness, and developing training to tackle skills shortages in the industry. I was delighted to be able to launch the PILOT "New Business" CD ROM earlier this year, which will help oil and gas suppliers diversify and seize new business opportunities. And, of course, I was pleased to be able to announce the award of licences under the 19th Round of offshore petroleum licensing, following the application of the additional environmental protection provided for under the Habitats Directive.

In this report you will find more detail about the work of PILOT and the initiatives undertaken by Government and industry to meet the challenges of continuing development on the UKCS. There is also background on the main events of last year, the licensing regime, and a forward look. I hope that you find it an informative reference guide and a useful overview of the activities of one of the UK’s most important sectors.

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