UK Upstream Regulations to Stress ESG
UK oil and gas producers are to publish standardised climate-related information in their financial reports from 2023, the offshore regulator Oil & Gas Authority (OGA) said March 8. There is a gap between investors' expectations and the information that is reported, it said, which deters financing. The statement has the backing of the upstream industry, Oil & Gas UK.
The new information will first focus on the 'E' of ESG: environmental, social and governance reporting. Investors and lenders are becoming more closely interested in ESG as parts of the world decarbonise and companies are already offsetting their carbon emissions through forestry schemes or using technology to measure methane emissions. And with the rising interest in net zero carbon, imported gas will also have to show the size of its carbon footprint. A cargo of LNG arrived in the UK with its carbon content offset.
Further, the OGA’s revised strategy requires operators and licensees to support the drive to achieve net zero while also pursuing their original goal of achieving the maximum economic recovery from the UKCS. From 2023, reporting on these factors will be mandatory.
Initially it is expected that companies will publish figures for flaring and venting emissions, as well as emissions produced on their own premises and health and safety statistics, waste management and disposal, and carbon intensity. Data should both be quantitative and qualitative with signalled improvements over time, it said.
OGA warned that the industry as a whole must pick up the pace or risk losing not only its social licence to operate, but also the support of the investment community.
OGUK said that the industry "well understands the growing importance of ESG reporting and looks forward to working with the OGA to implement a suitable reporting framework for UK operators. It will give industry the chance to showcase to investors the work they are already doing and will continue to carry out in areas such as sustainability, renewables, and low-carbon technologies, maintaining the UKCS as an attractive investment proposition as we lead a homegrown energy transition.”