The Pit Closures: North Sea oil and gas too costly, Eggar says

BRITAIN'S North Sea oil and gas reserves are under threat unless the offshore industry cuts costs and increases competitiveness, according to Timothy Eggar, the Minister for Energy.

Mr Eggar warned: 'Unless we can reduce these costs, we face falling production at home and dwindling orders (for offshore equipment) abroad. We face the decline of the North Sea.'

His remarks come within days of an assertion by Michael Heseltine, the President of the Board of Trade, that the UK North Sea has 50 years of gas reserves. Economists and industrialists attacked Mr Heseltine for getting his facts wrong and for including undiscovered reserves. Mr Eggar told a conference in Aberdeen that new techniques and new attitudes were needed for the next phase of development. At the same time he launched a government initiative to ease regulations and bureaucratic procedures on North Sea firms. He said that a working party would be set up to see how the industry could be helped further.

Ministers at the Department of Trade and Industry are concerned that marginal fields in the North Sea will be too expensive to exploit.

Mr Eggar said: 'Only radically new approaches can ensure

success.'