The short-term “kickstart” will be paid to the new Oil and Gas Authority (OGA) over five years from 2016/17 to help fund a the regulator’s drive to increase efficiencies in the UK’s offshore oil and gas industry.
The government’s pledge follows a recommendation from the Wood Review into how the upstream sector can maximize its economic recovery, which found that the UK could benefit from a £200 billion boost over the next 20 years by recovering an additional 3-4 billion barrels of North Sea oil and gas.
Energy secretary Ed Davey said in a statement that work on setting up the new regulator has seen already seen “a lot of progress”.
“In six months we have announced the new body will be located in Aberdeen, we’re recruiting for a world-class CEO, and we already have the legislative framework for the new body underway,” Davey said.
“This pace shows how determined we are to maximise the future potential of the UK’s offshore oil and gas industries which currently employ 450,000 people in the UK,” Davey added.
The OGA will undertake the licensing, exploration and development functions work currently carried out by government through the Department of Energy and Climate Change and will have a remit which extends to both onshore and offshore mining.