Industry leader cites importance of oil and gas production to European competitiveness

Oil & Gas Division
29 May 2013

The International Association of Oil & Gas Producers (OGP) has called on EU leaders to recognise the critical role played by oil and gas production in improving Europe’s security of supply and prosperity.“Energy provides the backbone for European competitiveness,” said Roland Festor, OGP Director EU Affairs, in a letter to the European Council representatives in advance of its 22nd May meeting.  The agenda includes ways to promote growth, jobs and competitiveness.OGP has identified six requirements necessary for oil and gas to contribute to the successful attainment of Europe’s economic and social goals:

  1. Balanced climate, security of supply and competitiveness objectives and the avoidance of multiple and overlapping instruments.
  2. A future climate policy focused on emissions reductions, not on specific targets-setting for the energy mix and energy consumption.  Further emissions reduction planning should be conditional on commitments from other carbon emitters and potential ‘green job’ creation must be weighed against the loss of industrial capability and existing jobs in other sectors.
  3. The safeguarding of a level-playing field for all energy sources is crucial to provide a ‘technology and fuel source-neutral framework’ that allows a diverse range of energy forms to compete fairly with each other; maximising innovation while minimising costs.  This avoids the risk of picking ‘winning and losing’ technologies
  4. A well-functioning, fully-integrated energy market that will safeguard EU competitiveness, security of supply, economic growth and employment.  Such a market will have to adapt to challenging new circumstances, given the planned integration of significant amounts of variable energy sources within the context of the current economic crisis. All current low-carbon energy sources, such as natural gas and technological solutions, will be required. (1) Recognition of the important role gas will play in the future internal energy Market. OGP has welcomed the EU’s recognition that natural gas is “critical for the transformation of the energy system”. Equally crucial for affordable and reliable energy supplies are diversified supply of fossil fuels, combined with the gradual transition to market prices for renewables by the phasing out of subsidies. (2) Recognition that gas from shale is potentially an opportunity for Europe to expand the diversity of natural gas supplies and can be developed safely, in an environmentally responsible way with benefits to Europe’s local, national and regional economies.  


In his letter to the European Council, Mr. Festor also called on EU leaders to adopt a “single, transparent, cost-effective, long-term trajectory for carbon abatement, which is shared economy-wide and accepted by society.” OGP believes that market mechanisms, such as a single EU-wide emissions reduction mechanism, can bring greenhouse gas emissions reduction at the lowest costs to society and recommends this remains as the central climate policy measure after 2020.

Mr. Festor also cited the oil and gas industry’s critical role in providing direct, highly skilled employment and significant income streams through taxation and royalty payments.

For example, in the UK, the largest oil and gas producer in the EU, total corporate taxes paid by the industry in the latest financial year amounted to €14 billion, about 25% of all corporation taxes paid; in Denmark total state revenue from oil and gas production is estimated at €4.1 billion for 2011.

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