Top energy firms announce major UK investments at London 2012 summit

Deputy Prime Minister Nick Clegg welcomed 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 across two days of summits focused on energy.

During his speech at the opening of the Government’s British Business Embassy on Energy at Lancaster House Clegg said: “The UK is the sixth largest market in low carbon goods and environmental services and this Coalition Government is unreservedly committed to helping our low carbon sector thrive. We seek nothing less than a clean, green, low carbon economy.  There is a global energy revolution underway. And the UK is not going to be left behind. We’re leading from the front.”

The Deputy Prime Minister also announced government contracts by UK Green Investments (UKGI), which is based at the Department for Business, Innovation and Skills, to provide £100 million of initial funding to specialist fund managers Equitix and Sustainable Development Capital (SDCL).

The fund managers will be actively encouraging foreign and domestic investment in Non-Domestic Energy Efficiency (NDEE) projects, alongside UK Government funds. The Government investments pave the way for the UK Green Investment Bank (UK GIB), which is expected to open later this year following state aid approval.

Day one of the summit focused on UK energy infrastructure, addressing the conversion, distribution and use of energy through the ecosystem. Attention was also drawn to the technology areas that will make the most significant contribution to decarbonising the power sector.  It was estimated that renewable energy could deliver between 30 and 45 per cent of the UK’s energy by 2030.

The second day highlighted 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.

The Chancellor George Osborne and Business Secretary Vince Cable announced that 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.

Business Secretary Vince Cable said “The oil and gas industry’s immense contribution to our skills base, industrial capacity and strength as an exporter is pivotal as we rebalance our economy. 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.”

The energy industry contributes 3.9 per cent of the UK’s GDP and employs about 173,000 people (7 per cent of industrial employment) and accounts for 9.9 per cent of total investment in the UK.  The UK already exports around $30 billion of energy-related goods and services each year, a growing proportion of which is in the low carbon sector.

The UK is the world’s 15th largest producer of oil and gas with daily production of around 2.2 million barrels of oil equivalent (BOE).  The UK Continental Shelf has produced more than 40 billion BOE and is estimated to have a further 14-24 billion BOE of potentially recoverable resources. The UK intends to develop these resources in the cleanest, most sustainable ways possible.

UK Secretary of State for Energy and Climate Change Edward Davey, also speaking at the event, said “The UK Government is taking the necessary steps to develop a secure, clean energy mix, and this is opening up massive, long-term investment opportunities.  Whether it’s our surging renewables sector or North Sea oil and gas exploration, new nuclear power or carbon capture and storage, there has never been a more exciting time to be in the UK energy sector.

The UK’s notable strengths across the energy industries – oil and gas, renewables, nuclear and thermal power generation – include project management, major contracting, design engineering, asset and operational management, design and manufacturing of advanced equipment, research and development, training and education, professional and financial services. All of these are delivered with a total commitment to health, safety and the environment.

In 2008, a successful bid from Cairn India Limited (a subsidy of the Cairn Energy PLC of UK) for petroleum exploration in Sri Lanka saw the birth of Cairn Lanka (Private) Limited.  Cairn Lanka’s successful drilling programme – the first in Sri Lanka in 30 years – has established a working petroleum system in the frontier Mannar Basin.  Following this success, Cairn Lanka has notified the Government of Sri Lanka of its intention to enter the second phase of exploration.  

While Cairn Energy PLC has sold a significant stake in Cairn India to Vedanta Resources PLC’s Indian subsidiary, Vedanta is a UK company.  Therefore, the UK’s connection in Sri Lanka’s oil and gas industry will remain firm for the foreseeable future.