Major New Energy Investment In Uk

Following the announcement by UKTI of the series of Global Business Summits to take place during the London Olympics, the Parliamentary Yearbook has been closely following progress and achievements as the conferences take place

Chancellor George Osborne and Business Secretary Vince Cable will today welcome substantial new investment in the UK as international delegates from the world’s oil and gas companies meet at the British Business Embassy in London.

During the six weeks of the Games, the British Business Embassy will host 17 global business summits at Lancaster House, following the annual Global Investment Conference on July 26. Each will be targeted at individual sectors or countries.

The series of global business summits taking place at the British Business Embassy is the largest and most ambitious set of trade and investment events ever held in this country.

Over 3,000 Government Ministers, business leaders and policy-makers from the UK and around the world will come through the doors of Lancaster House. These events will allow businesses and Governments to exchange views and ideas, discuss local and international economic challenges, develop strong global partnerships for future growth and showcase the best of British business to the world.

Today’s summit highlights the UK’s capabilities in energy and the opportunities for collaboration with overseas companies. Key themes include technology-specific issues related to regulatory and market reforms, financing needs, deployment challenges and the scaling up of industrial capacity.

Up to 4,000 UK jobs will be supported by the GDF SUEZ- operated Cygnus project – the extraction of shallow water gas from an 18 billion cubic metre field under the Southern North Sea – in partnership with Centrica and Bayerngas. And an International Centre for Advanced Materials created by BP with universities including the University of Manchester will build on the UK’s world leading status in research and development.

The Chancellor, George Osborne, said:

“The Global Business Summit is a demonstration of how the UK can lead the world in the energy sector: securing investment, creating jobs and building a more prosperous future. The Government is committed to creating an environment in which innovation can thrive and businesses can grow: that’s why top businesses such as BP are investing in the UK and supporting our world-leading universities in delivering cutting edge research.”

Business Secretary Vince Cable said:

“The oil and gas industry’s immense contribution to our skills base, industrial capacity and strength as an exporter are pivotal as we rebalance our economy. Today’s summit underlines the Government’s commitment to making the UK a great place for energy firms to do business, develop new technologies and recruit the best technicians and engineers.

“Collaboration between business and higher education institutions is boosting the status of the UK as a driver of innovation, and giving our firms a competitive edge. I’m pleased that BP has chosen to partner with a number of our world class universities to find new and more efficient ways of using and generating power.”

UK Secretary of State for Energy and Climate Change Edward Davey, said:

“The North Sea remains a vital source of the nation’s energy security and our expertise is renowned the world over. The Government is determined to maintain the best possible investment environment to ensure we capitalise fully on this national asset.

“There continues to be significant interest in the annual licensing rounds, with interest in established and the new frontier West of Shetland. The go-ahead for the Cygnus field is terrific news, and will contribute substantially to the UK’s gas needs and support thousands of high skilled jobs.”

Bob Dudley, BP’s Group Chief Executive, said:

“Advanced materials and coatings will be vital in finding, producing and processing energy safely and efficiently in the years ahead. Energy producers will work at unprecedented depths, pressures and temperatures; as refineries, plants and pipeline operators seek ever better ways to combat corrosion. Manchester has world-leading capabilities and facilities in materials and it was chosen after a global search to act as the ‘hub’ of the centre, with ‘spokes’ in other university departments worldwide. We look forward to building a very productive partnership between our professionals and the academic team at Manchester.”

International business announced today includes:

  • GDF SUEZ as operator, together with Centrica and Bayerngas, partners in the Cygnus project – the largest gas discovery in the Southern North Sea for 25 years – signed a Field Development Plan (FDP) at a ceremony hosted by Ed Davey at the British Business Embassy yesterday (6 August). The FDP authorises new oil and gas fields and ensures no adverse environmental consequences. Operator GDF SUEZ and its partners Centrica and Bayerngas decided to proceed with this £1.4 billion project following the Government’s 25 July announcement of a £500 million field allowance for large shallow water gas fields. They are announcing initial contracts for the development of the Cygnus field worth a total of £375 million, of which £337 million will be invested in the UK, directly creating more than 1200 local jobs. The Cygnus reservoirs hold estimated reserves of 18 billion cubic metres of gas and, once in production, should supply around 5% of the UK’s gas production, with the first gas being produced in 2015. Around 80% of the project value is expected to be invested in the UK, and the total development is expected to be a significant economic boost and create around 4,000 UK jobs
  • BP is creating an International Centre for Advanced Materials (BP-ICAM) in the UK to support fundamental science and the engineering application of advanced materials – those with superior qualities such as toughness, hardness, durability and elasticity – in the energy sector. The University of Manchester will act as the ‘hub’ of the centre, with ‘spokes’ in other universities around the world that have specific areas of expertise. At the launch these are: Cambridge University, Imperial College, London and the University of Illinois at Urbana-Champaign. The BP-ICAM is a strategic, long term investment, with BP committing $100 million (£60 million) over 10 years to the network of universities. It will create 25 new academic posts, at least 100 PhDs and 80 post-Docs, and help maintain the world-leading status of the UK in the research of advanced materials
  • Versalis, Italy’s largest chemical producer, owned entirely by ENI SpA, will be investing between €50 and €60 million in the development and expansion of elastomer production capacity at its Grangemouth site in Scotland in order to service technical developments in the automotive tyre manufacture market. Polimeri Europa UK Ltd, Versalis’ UK subsidiary, has been successful in its application for a £600,000 Regional Selective Assistance grant awarded on the basis of creating 20 new jobs. A further seven jobs will be created within contracting companies who supply services for the site.
  • Neftex, an Oxfordshire-based geosciences consultancy business that supports the activities of global oil, gas and mineral exploration companies, has won several international contracts over recent months, including a UKTI-supported contract with JOGMEC (Japan Oil, Gas and Metals National Corporation) worth several hundred thousand pounds. As a result of its thriving business, Neftex, which already has over 80 staff and is one of the biggest annual employers of geology graduates in the UK, expects to recruit up to 50 new graduate staff as part of its near-term plans.
  • Tangent Technologies Limited has been awarded a series of Australian contracts totalling around £105,000 and helping to create two new jobs in Plymouth, Devon, commencing in September 2012. TTL’s contracts include over £65,000 worth of contracts for BHP Billiton awarded last year, a contract to assist Rio Tinto with a drill rig reliability investigation, a new A$20,000 (£13,250) contract for the St Ives Gold Mining Company in Western Australia to survey hot oil pipes that will commence in mid-August, and a newly announced contract for Energy Developments Ltd (EDL) Australia, worth over A$40,000 (£26,500).
  • Melrose Resources plc has been granted a six-year concession for natural gas extraction at the Kavarna East field in the Bulgarian Black Sea. The company has been operating in Bulgaria for 14 years, has invested over €250 million and is already extracting natural gas from the Kaliakra and Kavarna fields, the production covering around 15% of the country’s natural gas consumption. The new concession will help to consolidate Melrose’s position in the Bulgarian gas market, from which it generated 60% of its $189 million gas production revenues in 2011.

Gas is the single biggest source of energy in the UK and, as a lower carbon fuel than current electricity generation, it is expected to continue to play an important part in the UK’s energy mix well until 2030 and beyond. As part of wider announcements on renewables and gas infrastructure, on 25 July the Government announced a new category of field allowance that will encourage investment in marginal gas fields by protecting the first £500 million of income from qualifying fields from the 32% Supplementary Charge (SC) tax rate.

The Parliamentary Year book will continue to monitor and report on progress as we go through the weeks ahead.

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