Stephen Timms MP

PILOT Partnership Work Group (PPWG) Share Fair

Share Fairs are just one of a number of measures falling from PILOT Partnership Work Group initiative which was launched in March 2002. Those with experience of past Share Fairs will know they are a novel mechanism, which allows the supply chain to engage with operators and major contractors on future plans and job prospects, as well as gain valuable insight into the work programme for the next 18 months. It's also an excellent opportunity for networking of course.

The last two Share Fair events together attracted more than 1300 delegates and I'm pleased that the event is being recognised by more and more businesses as one of the most significant and valuable oil and gas events of the year.

Work on PILOT's PPWG initiative started back in March 2001, when I was a Minister in the Treasury with responsibility for Energy matters. The aim was encouraging development activity through streamlining industry behaviours and commercial practices. The Workgroup's report was published in March 2002, recommending a range of innovative measures to stimulate activity, accelerate negotiations and reduce costs.

These measures included amongst other things two new Codes of Practice, one for licence holders and the other for supply chain partnership. However, things have moved on apace since then and I'm pleased to see we now have firm commitment from the industry with many leading companies signing up to the Codes of Practice. By attending this event today, you have already benefited from this initiative and I would urge you all to get on board and sign up to the codes of practice if you haven't already done so. It is only by all parties working together towards a common goal that we can substantially change behaviours within the industry. And whilst we are just at the beginning of this journey, there has already been some evidence of change. It gives me great pleasure today to launch the results of the 2002 Compliance Survey.

The survey gives us some valuable information on supply chain practices in the UK. There are, of course, areas for improvement and the implementation group will continue to work on these as we move forwards. Action plans are in place for each priority area and progress will be monitored throughout the year and reported into the PILOT process.

It gives me pleasure, secondly, today to launch PILOTs' 2002 Annual Report. The PILOT initiative is now entering its fourth year and the quarterly meetings, which I chair, provide the opportunity for Government and Industry leaders to discuss critical strategic issues facing the oil and gas sector. It is significant incidentally that this forum has also provided a model for the Innovation and Growth Teams which the DTI is establishing in other sectors, so this flagship formula is helping other parts of the industry too.

PILOT has been extremely influential in advising and supporting both Government policy and industry practices in the oil and gas sector, but just as external factors led to PILOT's creation, so other factors can also significantly impact on the PILOT process.

An obvious example was the Budget 2002 changes to the fiscal regime in the North Sea. Our aim was to ensure a fair share of revenue for the taxpayer, whilst also encouraging long-term investment in the sector. I understand the initial concerns expressed by the industry about the unexpected nature of the changes but I'm pleased that since then, Budget 2003 has helped restore confidence with the abolition of PRT on third party tariff business coupled with Treasury's willingness to sit down and talk. In fact, a large part of the PILOT meeting, which took place earlier today, involved dialogue with the Treasury. I hope you will take the opportunity to participate in future consultations with the Treasury and feed in to the decision-making process.

There will be difficult issues but I'm heartened by your ability to remain solidly supportive of their common purpose to deliver the 2010 targets. We must all work hard to overcome the challenges of ever-increasing globalisation of the industry bringing tougher and tougher competition for investment resources and continuing challenges from our international competitors. The Oil and Gas Industry Task Force undoubtedly set PILOT some stretching targets. And although they may seem difficult at the moment, I am confident that the continued innovative and co-operative efforts of all stakeholders in the industry will maximise the chances of success.

Through PILOT, industry and government have created a number of useful initiatives to keep us on track with the PILOT targets and I would like to re-enforce that we all have a role to play in maintaining the momentum and ensuring the future competitiveness of the UKCS. I would therefore urge you all to become fully engaged and work towards our common aim of preserving and extending the life of the UKCS and maximise production.

Well, today has been part of a steep learning curve for me, but I've very much enjoyed being here and I've been very impressed by the enthusiasm and dynamism of today's events. Don't forget to pick up your copies of the PPWG Compliance Survey and the PILOT Annual Report before you leave today and I hope you enjoy the other presentations this afternoon and make some useful contacts. I look forward to working with you all and meeting with you personally in the months to come.

Thank you.