Appendix

B. Recent Initiatives to Promote the UKCS

DTI and Oil & Gas UK are working closely together through PILOT to encourage a positive business environment which can help maximise recovery of oil and gas. A number of initiatives are underway, directed at the objectives outlined in the table below. These are necessary conditions that, together with an appropriate fiscal and regulatory regime, will enhance the UKCS’s competitiveness and its ability to attract international investment.

Objective		Initiative	Progress / Success
Improving Access to Data	•   CDA, a subsidiary of Oil & Gas UK, manages two data services that have become indispensable tools for any company currently working or planning to work in the UKCS: -   DEAL (www.ukdeal.co.uk) – a free, public, web-based service to promote and facilitate access to data and information for the exploration and production of oil and gas in UK waters. -   CDA DataStore – provides digital data to subscribers on more than 10,000 wells drilled on the UK Continental Shelf.		•   DEAL facilitates access for thousands of regular users to several million items of data for the UKCS. Developments underway will enhance its value to users through significantly increased licence data functionality and ongoing initiatives to further improve data quality. •   The CDA DataStore has 46 members and about 500 users who download digital well log data and scanned well reports via the internet from anywhere in the world. An equivalent service for seismic data is at an advanced stage of planning.
Removing Barriers to Entry	•   Fallow Initiative – places acreage which has been inactive for some time into the hands of companies willing to use it. •   Frontier licences – aimed at new areas, they offer a larger acreage and are 10% of the cost of a traditional licence for the first two years. •   Promote licences – for new entrants, these allow an opportunity to assess acreage for a two year period, at 10% of the cost of a traditional licence. A commitment to drill at least one well or other significant activity is required to retain the acreage.		•   A total of 75 wells have been drilled on fallow blocks or discoveries since 2002. •   252 Promote licences have been awarded so far – 65 in the latest round (the 24th). •   Six Frontier licences were awarded in the latest round – the same number as in the previous round.
Promoting the Good Stewardship of UKCS Assets	•   Stewardship – an annual review of the performance of producing oil and gas fields, carried out by DTI. Joint Venture partners are engaged in discussions about improving their Stewardship to an acceptable standard. If a serious shortfall is identified, the Stewardship process provides a framework for improvement. If necessary, DTI could require the Joint Venture to undertake certain investment or change the operator.		•   Successful in raising awareness of the benefits of critically analysing the potential of individual assets. •   Too soon to quantify outcome. A number of cases with potential to make improvements have been identified.
Facilitating Access to Infrastructure	•   Code of Practice on Access to Infrastructure (ICoP) – aimed at improving shared access to pipeline systems and encouraging investment. Data on infrastructure availability, service standards, specifications and terms and conditions of deals concluded under the Code are available to aid transparency in negotiations.		•   Over 50 companies have signed the ICoP (including all the infrastructure owners). •   38 Automatic Referral Notices (ARNs) – a dispute resolution process – have been submitted to DTI. •   A review of its implementation shows that the code is starting to influence processes and behaviour.
Encouraging Positive Commercial Behaviour and Easier Asset Transfers	•   Commercial Code of Practice – an agreed framework for co-investors in assets to minimise costs and time involved in negotiations and promote positive commercial behaviour. It helps facilitate the transfer of assets.		•   Over 95% of licensed companies have signed. •   Annual survey of transactions and issues associated with them; successful deals and their benefits are highlighted.
Promoting a Strong Supply Chain	•   Supply Chain Code of Practice – a set of best practice guidelines aimed at streamlining commercial processes, (e.g. a system for selecting qualified suppliers – FPAL, model invitations to tender – ITTs, use of standard contracts – LOGIC), improving behaviour during negotiations and enhancing overall business performance. It actively promotes 30-day payment for goods and services.		•   More than 90 companies have signed the recently updated code. • 2006 Share Fair a great success. • Suite of model ITTs is being developed. • Updating of the suite of standard contracts is nearing completion. • Purchasers (operators and major contractors) and suppliers have been taking part in regular two-way feedbacks of performance.