North Sea regulator launches probe

The Oil and Gas Authority has launched a probe into a firm regarding a potential breach of regulations as it noted the importance of the industry retaining its social licence to operate.

The regulator said it was investigating a firm regarding a possible breach of reporting requirements under a licence.

The organisation did not name the firm that is under investigation or give any details of the potential breach. However, it underlined the importance of regulatory issues at a time when oil and firms are trying to show they can be part of the solution to the problem of climate change. Critics have claimed fossil fuel producers have exacerbated the problem.

In the announcement of the launch of the investigation, the OGA noted that it had communicated to industry the strategic significance it places on regulatory compliance to support industry’s “social licence to operate”.

Firms that are found to be in breach of regulations could face fines worth up to £1 million.

In January last year OGA chairman Tim Eggar said the oil and gas industry’s social licence to operate was under serious threat amid public concern about the environment,

He made the comment weeks before the Brent crude price fell to an 18-year-low, of less than $20 per barrel, as the coronavirus crisis engulfed the world. The resulting market turmoil triggered a deep downturn in the North Sea.

The OGA was formed amid efforts to help the North Sea industry fight back during the slump that followed the sharp drop in oil prices from 2014 to 2016. It has not imposed financial penalties on any firms to date.

The organisation noted that the investigation announced yesterday followed an enquiry which concluded that there was sufficient evidence of a breach to go ahead.

Oil prices have rallied amid hopes of a global recovery and moves by major exporters to support the market.

Brent crude traded up $0.82/bbl at $63.25/bbl yesterday afternoon.

Source: The Herald

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