International Oil and Gas

Transcription

1 International Oil and Gas FCO Priorities Nick Norton Energy Advisor, Climate Change and Energy Department, FCO London Finding Petroleum April 2014, London Tullow Oil Ghana Jubilee FPSO UNCLASSIFIED

2 Energy Diplomacy and Soft Power Traditional approach has been to use foreign policy to deliver UK energy goals: o Security of UK supply o Inward and outward investment o Climate change agreement Energy drives the international outlook of states. Aim is to use energy understanding to achieve foreign policy goals: o Security and conflict resolution o Broad Prosperity agenda o International development

3 Fossil Fuels Remain Dominant by region by sector by fuel 81% 2035 Renewables growing fast but from a low base 95% of growth is non-oecd, China then India takes over in second decade Oil grows slowest, gas fastest, fossil fuels 27% share each by 2035 Source: BP Energy Outlook 2014

4 US Swims Against Imports Tide Source: IEA 2012

5 Supply Assured, Security Mixed but Poor Sustainability UN Framework Convention on Climate Change Lima, Peru 2014 and Paris, France 2015 meetings will be key Source: BP Energy Outlook 2014

6 Sector Governance Governance in the energy sector is essential to realise benefits of development for host nation. Best practice is supported by the UK. Extractive Industries Transparency Initiative (EITI) Principles on disclosure of payments made to governments under contracts ( Voluntary Principles on Security and Human Rights Agreement between governments, NGOs and extractive industry companies. Sets voluntary principles on how companies will operate in difficult environments including obligations to respect human rights and on use of private security companies ( International Code of Conduct for Private Security Companies Swiss convened body that sets standards for the private security industry. Leading UK private security companies such as Aegis and Control Risks are members ( Fossil Fuel Subsidy Reduction Consumption subsidies are a budgetary burden on the host nation and encourage wasteful consumption with environmental consequences and benefit richer consumers most.

7 Subsidies Cost Governments ~$550bn pa Source: IEA 2013

8 UK Comparative Advantage in Sector Home to leading IOCs (BP, Shell, BG), explorers (Tullow, Ophir, Dove) and energy service companies (Petrofac, Wood Group, Amec); Respected regulatory and licensing regimes across energy sector; Proven track record and expertise in the offshore hydrocarbons sector; The City of London - centre for global energy trading and financing; Research and teaching institutions who are global leaders in energy; Reputation for policy leadership and innovation on energy and climate issues (e.g. framework for low carbon power generation); Leading voice in the IEA, IEF, IAEA and other energy fora with ability to convene.

9 UK Capability - Strength in Depth International Oil Companies BP, Shell, Tullow, BG Group, NOCs National Engineering, Procurement and Construction Contractors Strength will vary by country, e.g. India, China, Brazil and Turkey have strong groups of contractors UK Technology Partners AMEC, Foster Wheeler, Petrofac, Jacobs Engineering, The Wood Group UK Supply Chain Companies GE Power Conversion, Bridon International, Airpac Bukom, TRAC Oil & Gas Ltd, Weir Group, Bowtech Ltd, EM&I Alliance Ltd, Optima, Nautronix, Reflex Marine, Dunlop Marine, Abacus Valves, Bel Valves, Motherwell Bridge, Express Engineering, Impackta, Trac Oil & Gas, Exova, Furmanite, Hydro Group, Contract Design Group, Lindapter Source: UKTI 2013

10 Some Conclusions Energy is a key input to foreign policy for the UK and others Emerging markets, especially China and India, drive demand and emissions growth Renewables grow fast but fossil fuels remain dominant - Climate Change agreement in 2015 is a key priority for the UK Sector governance important to realise benefits of development North American (not US) energy independence will become a new reality, for most others import dependency rises UK sector comparative advantage industry and policy formation

11 Thank You & Questions