Consultation on “satisfactory expected commercial return” safeguard (SECR)
The Oil and Gas Authority (OGA) has launched a consultation on the OGA’s approach to assessing the “satisfactory expected commercial return” (SECR) safeguard as set out in the MER UK Strategy.
SECR is an important safeguard for companies seeking to follow the MER UK Strategy and was introduced at the request of industry. It makes clear that companies are not obliged to invest in projects which, while they meet MER UK, do not pass the objective SECR test. In any case where SECR is applied, the OGA will take a pragmatic approach including full detailed discussions between the OGA and companies.
The SECR safeguard provides the same protection in the Strategy’s “use it or lose it” process – where companies might otherwise face being required to relinquish licences if they choose not to maximise economic recovery and, after a reasonable period of time, have been unable to secure investment or divest their assets.
The OGA is aware companies use a wide range of metrics and inputs in assessing returns, not all of which are included in the proposed SECR safeguard and fully expects companies to continue to use their own systems for their purposes. The OGA will assess SECR only for the purposes of and as set out in the Strategy, and has no intention of expanding the application of SECR.
The purpose of the consultation, which opens today (13 December 2017), and closes on 1 March 2018, is to provide clarity and seek views on the OGA’s proposed guidance on how SECR safeguard should be assessed.
The consultation is available here