Britain must act to save $500 bln of oil

Britain must get tough with major oil firms that prevent smaller producers from getting access to platforms and pipelines, or risk leaving as much as $500 billion worth of oil in the ground, North Sea oil companies say. Output from the North Sea has been in steep decline as mature fields are exhausted and global firms such as BP and Shell focus on more promising projects elsewhere. But there is still oil under the sea bed that a host of smaller operators is keen to extract, and Britain's cash-strapped government is anxious to maximise tax revenues. The problem is, many small producers lack the infrastructure to get their oil to market and need access to platform hubs and pipelines owned and operated by the big oil companies. And much of that infrastructure is coming to the end of its working life.

Helping small rivals, however, is at best a low priority for oil majors, and at worst unprofitable and not in their interest.

"It's more of a headache than anything else," said Stephane Foucaud, managing director at research and analysis firm First Energy Capital. "They (oil majors) want to exit the North Sea, so dealing with small offtake agreements is not a priority."

The industry's infrastructure code of practice is meant to help smaller players bring new fields onstream that require access to third party platforms and pipelines. That often doesn't happen, according to industry insiders.

"We look for owners of infrastructure to market it ... and use it for the greater good, but there is a variation in that," said Simon Toole, head of licensing exploration and development at Britain's Department of Energy & Climate Change (DECC).