Blueprint unveiled to unlock North Sea’s £1.5tn oil and gas

FIRST Minister Alex Salmond yesterday unveiled a blueprint for the future of Scotland’s oil and gas industry, aimed at driving forward the recovery of an estimated £1.5 trillion in reserves locked in the North Sea.

The move came as the industry received a boost with the announcement that the Kuwait government’s Foreign Petroleum Exploration Company (KUFPEC) is to take a 35 per cent stake in EnQuest’s Alma and Galia oilfield developments in the North Sea in a deal worth £300 million.

Nizar Al-Adsani, chairman, said “In keeping with KUFPEC’s strategic objective to acquire quality production and reserves, we are pleased to re-enter the North Sea through EnQuest’s Alma and Galia project. ”

The news was welcomed by Chief Secretary to the Treasury Danny Alexander, who said: “This is good news for North-east Scotland and the whole of the UK. At the Budget, the government set out ambitious measures to stimulate billions of pounds of new investment in the North Sea, increasing production and creating jobs. Today’s deal between EnQuest and KUFPEC proves that the UK continental shelf remains an attractive prospect.”

Mr Salmond’s announcement of a new strategy, developed in partnership between the industry and government, has set a series of ambitious targets for 2020, including proposals to increase the rate of recovery of hydrocarbons from 40 to 50 per cent, and to increase export sales from 46 per cent to 60 per cent, worth an additional £18 billion to Scottish-based companies.

The strategy document states that, although £960bn in oil and gas has already been extracted from the North Sea over the past 40 years, the wholesale value of the remaining reserves is estimated to be worth up to £1.5tn.

Mr Salmond said the new strategy represented a “hugely significant milestone” in the future growth of the industry and marked an attempt to move away from “seeing the oil and gas sector as a convenient milch cow” for public finances.

He said: “It is industry in the very fabric of the economy. Oil and gas is one of Scotland’s greatest industrial success stories.

“With as much as £1.5tn of oil remaining to be extracted from reserves around these islands, an increasingly buoyant export sector now reaching 100 different countries, and emerging opportunities to deploy the sector’s vast expertise in other offshore projects, the industry has a bright future. It’s an enormous market place. Well over half of the value of hydrocarbons have still to be realised from the waters around Scotland.”

Another Arabian company, TAQA Bratani, part of an Abu Dhabi-based energy giant, is already established as one of the fastest-growing exploration and production companies operating in the UK Continental Shelf with the Brae field complex.

It also operates the Tern, Kestrel, Eider, Cormorant and Pelican fields and has a 24 per cent interest in the Sullom Voe terminal on Shetland.