Britain is likely to have to ditch its hands-off approach to the oil industry if it is to reap the benefits of the billions of barrels of hard-to-extract oil remaining under the North Sea..
LONDON, Feb 14 (Reuters) - Britain is likely to have to ditch its hands-off approach to the oil industry for a mix of regulation, tax breaks and investment if it is to reap the benefits of the billions of barrels of hard-to-extract oil remaining under the North Sea.
Changing the way an industry has worked for decades will be no easy feat. It could involve costly legal disputes over existing contracts, and a long-term commitment from a government focused on the short-term goal of cutting its deficit.
But with many North Sea oil platforms and pipelines coming to the end of their working lives, time is running out to get at the oil, putting pressure on a government review of the industry - due to be published this month - to deliver a plan of action.
"This is urgent. It's not a problem we can see happening in the next decade, it's a problem now," said David Bamford, a former head of exploration at oil firm BP, who now runs his own consultancy and sits on the board of Tullow Oil.
Production from UK waters fell by about 40 percent between 2010 and 2013 to the lowest level since the 1970s, according to industry group Oil and Gas UK. Exploration has also tapered off, with consultancy Deloitte reporting last month that only 47 test wells were drilled last year - the lowest level since 2003.
That is bad news for a cash-strapped government which in fiscal 2012-13 still relied on the oil industry for over 15 percent of all corporate taxes.
It's not that North Sea oil is running out.
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