Hydrocarbon Policies and Legislation: United Kingdom

This chapter will outline the development of British hydrocarbon law and policy and offer some critical comment relative thereto. Focussing primarily upon the offshore industry, it will chart the evolution of British oil and gas law and policy, discuss the manner in which the state organises its governance of the upstream oil and gas sector, outline the extent of British governmental participation, note the absence, in Britain, of oil funds, explain the extent and basis of the direct state take from upstream activities and consider the means by which the British government seeks to encourage investment on the UKCS. Several major themes will be developed throughout: first, the relative lack of strategic planning and state direction in the British system, at least historically; second, the long shadow cast by decisions made in the early days of the development of the UKCS; third, the relevance of competing political ideologies at key moments in the development of the regime; fourth, the state’s attitude to various forms of risk; fifth, the tendency, at least at certain key points, to see oil and gas as just an industrial sector like any other, not requiring especial treatment; and sixth, the potential for different limbs of the state to pull in different directions, causing adverse consequences for the regulated industry, and arguably, for the state itself. It will be seen that (at least, outside the field of tax) the cumulative effect of these factors had, until recently, been the creation of a system of non-interventionist governance where the state plays a less pronounced policy role than is the case in many other oil and gas provinces. However, we have, in the Wood Review, seen a recent acceptance of the fact that this approach may not be sufficient to meet the challenges of a rapidly maturing province, and the implementation of significant regulatory reform.