ROYAL DUTCH SHELL GROUP .COM The Scotsman

The Scotsman: Shell 'should be forced to give up drilling rights': "ENERGY minister Malcolm Wicks is facing demands to force Shell to give up North Sea acreage, following revelations that the oil giant will slash its UK drilling programme on the back of the Chancellor's latest tax raid on oil company profits. ": Sunday 18 December 2005

IAIN DEY CITY EDITOR

ENERGY minister Malcolm Wicks is facing demands to force Shell to give up North Sea acreage, following revelations that the oil giant will slash its UK drilling programme on the back of the Chancellor's latest tax raid on oil company profits.

Shell revealed this weekend that it is now hiring just two drilling rigs to work its North Sea acreage over the next few years, after cancelling an order for a third. The move came as the first evidence that Gordon Brown's doubling of the supplementary tax on oil companies will devastate North Sea investment levels.

But now trade union leaders are agitating for the Department of Trade and Industry to force Shell into revealing more details of its new drilling plans and to pressurise the firm into revoking some of its North Sea licences.

Graham Tran, the regional organiser for trade union Amicus, said: "I will be writing to the Energy minister, Malcolm Wicks, on Monday, to ask him to use his department's power to make Shell identify which licence blocks the company is no longer planning to drill.

"If there are any blocks that fall under the government's new initiatives to protect North Sea investment, we should set the clock ticking and get them out of Shell's hands as soon as possible."

The DTI strengthened its powers over North Sea oil companies earlier this year by introducing new schemes, such as the fallow fields and stewardship initiatives.

The new system means that any block which has been undrilled for two years has to be handed back to government.

The process was designed to ensure that older North Sea blocks would be developed to their full potential by speeding up the programme of UK asset sales that the oil majors began several years ago.

A number of smaller oil companies moving into the North Sea have complained that there are not enough assets available for them to buy.

Until recently, many of the majors were refusing to sell because potential buyers have not been willing to recognise the current high oil prices.

The new licensing scheme, which the oil companies agreed to in a number of showdown summits over the summer, allows DTI officials extensive access to the drilling records kept by oil companies.

If the DTI then decides that the licensee has not been doing enough work on the licence, they can then enforce a drilling programme on the companies.

The two-year deadline kicks in from the date at which the block is declared "fallow".

Last updated: 18-Dec-05 00:28 GMT

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