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Baseefa Ltd

Shell UK chairman confirms group’s continuing interest in North Sea

27 August 2013

In an interview with The Daily Telegraph, Shell UK chairman Ed Daniels says the group will continue to remain an important player in the UK oil & gas sector. "We see that there is a material presence for Shell in the North Sea for the years to come. I think the North Sea as a province has decades of activity," he said.

S"There's a misperception that oil majors, Shell included, are not particularly interested in the North Sea," daniels said. "Actually, that's just not true. We at Shell are a big North Sea producer today, representing 14% of UK oil. We're investing £2bn a year in the North Sea, either in new developments or refurbishment of existing activities to re-life them for the next 10 and 20 years.

He insisted that oil and gas remained a long-term business and said any repeat of the £10bn tax grab in the 2011 Budget would the North Sea oil industry to reappraise investment decisions.

"We're making investments today that are 20-plus years in duration," he said. "For us to have the certainty that those investments are going to pay out for our shareholders, we need a stability in the tax regime and the 2011 raid on taxes was a real disappointment and very destabilising for long-term investments in the North Sea.

"I do believe that the Government has remedied that. There's the brownfield allowance and allowances around high-pressure and high-temperature fields, so the Government is putting the measures in place.

"When you're investing for such a long period of time, if you don't have the confidence in the stability of a taxation regime, it just becomes impossible for you to make those long-term commitments, which are absolutely critical for the vibrant investment we all want in the North Sea. We've made that absolutely crystal-clear to the Government."

Shell's UK business employs 6,500 workers, processes 35% of the UK's gas and includes the headquarters of Royal Dutch Shell's downstream, treasury and global trading businesses. 

Daniels thinks Britain's immigration policies make it difficult to import skills and experience from overseas, and he insisted on the importance of keeping UK schoolchildren, particularly girls, engaged in science, technology, engineering and mathematics and to encourage them to progress to degree level and meet skill shortages.

"Getting the talented 10-year experienced chemical engineer is just very tough at the moment. In the oil industry, we have a huge bulge of retirements coming up and it is going to be a challenge in terms of how we recruit sufficient talent to meet the challenges of keeping the lights on, driving the world's energy system, addressing climate change and decarbonising the economy."

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