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Sunday Telegraph: BP and Shell need help

Business comment
By Dan Roberts, Business Editor

(Filed: 24/09/2006)

My colleague Robert Watts shows how the DTI could be dismantled relatively painlessly elsewhere, but one function that urgently needs to be reinvented is a Department for Energy.

Proper government support for business should be about creating an internationally competitive environment, and there is no more competitive international challenge or environmentally sensitive issue than energy security.

Passing energy to an enlarged environment department would inevitably mean getting this balance wrong on important issues such as nuclear generation and gas supply.

A still bigger challenge is to make sure that Britain retains good access to the world’s dwindling supplies of crude oil.

So-called resource nationalism is already threatening the open access of BP and Shell to markets in Latin America and Africa. It does not take a conspiracy theorist to wonder whether the intense political pressure they are under in the US and Russia is also exacerbated by their foreign status.

With all due respect, stiff words from the Foreign Secretary, Margaret Beckett, will not change things while the UK is still playing the game according to last century’s free market rules.

A powerful new Department of Energy should do much more to help our oil majors deal with the real politik of oil diplomacy. With North Sea oil in decline, the UK will always be on a sticky wicket but the days of assuming our domestically-based oil majors can fend for themselves without high-level political cover are gone.

Downing Street has helped before by providing high-level blessing for BP’s investment Russia. A more concerted strategic effort is needed to help us all deal with the big issue of our age.

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