PD/st0601_4.PPT

"Progressing Partnerships Operators-DTI"

Why are we concerned?

Short term activity is improving

but

basin is mature,  finds are smaller exploration levels low and managers risk adverse many prospects and discoveries not material to all licensees little incentive to  turnover inactive licence holdings barriers to new players commercial behaviours learnt in different setting

PD/st0601_4.PPT

"Progressing Partnerships Operators-DTI"

These conditions allow:

deep rooted, persistent, misalignments within partnershipsand between partnerships

low expectations of what can be achieved protracted negotiation and completion of transactions and ample opportunity for collapse

loss of momentum quality second and third tier operators avoiding the UKCS

PD/st0601_4.PPT

"Progressing Partnerships Operators-DTI"

Evolution

If left the UKCS will evolve and better practices will develop   

but without pressure

this evolution will be slow and wasteful economic oil will be left in the ground

Low oil price was driving this evolution faster, see it as the job of thisworkgroup to keep the pressure up.

PD/st0601_4.PPT

"Progressing Partnerships Operators-DTI"

The DTI wants to see licences in the hands of those best able tomaximise the wealth creation.

Specifically our targets for the workgroup are:

Eliminate pre-emption Binding code of practice for negotiation and settlement

Licences relinquished  after 4 years withoutdrilling/development approval.

PD/st0601_4.PPT

"Progressing Partnerships Operators-DTI"

Accelerating evolution

DTI has a number of ways to help industry  towards these targets:

reward good performance by the use of discretionarylicence powers

reward good performance by the award of new licences

reward good performance by extending licence terms ofproducing fields

use  mc powers to require exploration drilling and developmentactivity only where licensees have failed to perform

revise licence regime