- Consultation aims to sweep away blockers to transactions
- Security of supply and improved production expected to result from greater industry co-operation
- Industry workshops have informed draft guidance
The North Sea Transition Authority (NSTA) has today (28 March) moved to speed up North Sea oil and gas production by proposing the removal of barriers to investment.
The NSTA is determined to assist industry in its role of ensuring security of domestic energy supply and has opened a consultation on new guidance which aims to streamline the buying and selling of assets.
Operators and licensees worried about transaction delays which can damage working relationships, increase costs and hold up operational and strategic decisions asked the NSTA to look into the situation.
The NSTA learned of licensees and potential investors who have been frustrated by challenges they have encountered either during, or because of, licence assignments. Concerns relate to matters such as:
- Operational activities and capital projects being slowed
- Blocked transactions having a knock-on effect on North Sea production
- Concerns over decommissioning cost exposure delaying deals
- Excessive co-venturer requirements tying-up capital that could be used productively elsewhere in the basin
The consultation will address these and other related issues. It will allow licensees and investors to share their thoughts on matters including how best to strike a balance between market liquidity and preserving investor confidence, the role of self-regulation and what the NSTA guidance on licence assignments should include.
Among the proposals in the draft guidance are:
- Agreeing a transaction Project Plan at an early stage, including the resources needed to efficiently and effectively implement the Project Plan
- Preparing a Capability Pack – created by the Buyer and Seller to inform Joint Venture (JV) partners of key corporate, technical and financial information the JV requires to reach a decision
- Agreed timelines with milestones
- Candid, open, constructive negotiations
- Proportionate security arrangements to meet decom liabilities
Jane de Lozey, NSTA Director of Regulation, said:
'The UKCS has a rich history of successfully welcoming new investors to the basin.?These investors have brought new capital, new ideas and new vigour; the NSTA wants this to continue to support the UK’s need for energy security.'
'Some transactions have been delayed or even jeopardised by buyers and sellers failing to engage Joint Venture partners early enough and the new guidance will provide clear actions to take and when to take them, to ensure that production is maximised.'
A series of workshops with senior industry representatives were held in London and Aberdeen before the consultation opened and the opinions expressed in those meetings have informed the draft guidance.
The consultation will be open until 23 May 2023 with the new Guidance published later in the year. To contribute, go to here.
Source: NSTA
