Hydrocarbon industry is widely popular as intensely challenging and, evidently, highly profitable for majority of stakeholders. Yet it has been always in the line of fire amidst heady mix of regulations and looming lawsuits. The ghost of BP’s misadventures has not yet completely shredded off from wider industry. Never has it been so relevant in the context of escalating financial crises, increasing costs and depleting reserve base that companies strongly feels strong need to address changing business climate.
Historically, North Sea was never bet upon as a basin that could deliver in longer term. However, it has time and again proved analysts wrong is not enitrely. Recent discoveries West of Shetland and southern North Sea presents this case strongly and factually. Since the focus is slowly shifting from Oil fields to Gas developments, the numbers look reasonable to exploit much debated Fiscal regime in place, which favors smaller or marginal fields in the area. The tax and royalty component is simply quite complex to comprehend yet it can not deter the investment coming through in future. The most important aspect of the regime being the ring fencing it allows the licensees to unitize fields based on early revenue stream and actual development work they undertake around the field. Another improvement in fiscal terms has been the provision of relinquishments which then allows DECC to cancel the lease if it has not been developed 5 year post the field development approval.
UKCS has been an attractive playgrounds for small, independents with likes of Apache, Hurricane, Cairn, Fairfield …..
The Oil Diaries 