THE battle to plug a North Sea gas leak could cost oil companies more than £8 billion, affecting thousands of industry jobs, it has been claimed.
Total's Elgin platform, around 150 miles off Aberdeen, has been leaking gas since last month with initial estimates suggesting it may take up to six months to fix.
However, one of the world's leading credit scoring agency yesterday claimed all UK oil and gas offshore firms may be required to set aside up to £8.2bn for the right to operate in European waters following the incident.
The oil industry say this could have a huge impact on jobs and the sector's contribution to the UK's economic recovery.
The European Commission proposed requirements last autumn for the licensing authorities in member states to ensure only operators with "proven sufficient financial capacities" necessary for environmental protection are allowed to explore for, and produce oil and gas.
Fitch Ratings yesterday published its analysis of the potential financial and rating impact on offshore producers resulting from the proposed new laws. It said the leak makes it most likely the Commission will implement stricter licensing and safety requirements on oil and gas companies.
As a result some of these could dramatically increase the size and scope of firms' environmental liabilities, potentially resulting in companies setting aside up to €10bn to obtain operating licences. It would seriously affect the credit ratings of firms operating in the North Sea and other EU territorial waters.
Fitch said: "We would likely view any funds earmarked by offshore operators to satisfy a financial means test as segregated and regard them as blocked cash in our financial calculations." It predicts this approach could have negative impact on liquidity or cash flow for even the highest investment grade oil and gas companies operating in EU territorial waters, and adds: "The latest North Sea incident could affect the debate over EU proposals to strengthen safety requirements for offshore drilling.
"The draft legislation still requires approval from the European parliament and EU member states." It added: "We consider the chances of formal adoption of some or all of the proposed EU-level standards are growing despite UK opposition."
Industry body Oil & Gas UK said it would weaken what is already a "robust, world-class offshore safety regime".
Health and safety director Robert Paterson said: "This could have a negative knock-on effect on jobs and the industry's contribution to the country's economy – not to mention jeopardising potential recovery of the UK's remaining 24 billion barrels of oil and gas. Implementing the EU's proposals would lead to the dismantling of the UK's regulations, damaging safety and environmental protection standards."
Jake Molloy, regional organiser of the RMT Union's Offshore Energy Branch, said the EC's proposals had made clear it is driven by the Deepwater Horizon oilspill in 2010, and the need to protect Europe's shores from similar catastrophes. He added: "I sense it is more about a power grab than it is about health and safety, as well as the EU common fisheries policy we could be looking at the EU common energy policy. That said there are some good aspects to it.
"I don't agree entirely with Oil and Gas UK that this could see the end of the North Sea, but the fact is we don't know. If you impose another layer of bureaucracy and you have to have funds up front, that is obviously going to detract from investment, and we all know the oil firms will go where the easy oil is. So it could lead to a more dramatic decline [in the North Sea]."
Friends of the Earth Scotland backed the draft proposals.
Meanwhile, the results of a study into the Elgin incident's environmental impact are expected to be released by the Scottish Government today
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