Chancellor of the Exchequer George Osborne said GDF Suez and BP Plc will invest more than 1.5 billion pounds ($2.3 billion) in the U.K., part of a government effort to support the economy and lure companies to pay for upgrading the nation’s energy infrastructure.
GDF Suez of Paris, the largest European power generator by market value, along with London-based Centrica Plc and Bayerngas GmbH of Munich plans to develop an 18 billion-cubic-meter gas field under the North Sea, the U.K. Department for Business, Innovation and Skills said. It will support at least 4,000 jobs.
“The U.K. can lead the world in the energy sector,” Osborne said in an e-mailed statement. “The government is committed to creating an environment in which innovation can thrive and business can grow.”
The investment was the biggest of six outlined by the government after a conference hosted by government ministers in London sought to firm up the U.K.’s reputation for stability in energy policy. A dispute between Osborne and Energy Secretary Ed Davey last month over support for subsides for renewable power left companies questioning the stability of government policies.
The announcement was made at the British Business Embassy, an investment conference attended by company executives including BP Chief Executive Officer Bob Dudley, Royal Dutch Shell Plc Chief Energy Adviser Wim Thomas and Andrew Gould, chairman of BG Group Plc.
Dudley said he expected world energy demand to rise 40 percent by 2030, which “is the equivalent of another whole China being formed and another whole United States. Partnerships with academic institutions are vital to progress, and with Britain having so many world-class university departments, it’s no surprise that we spend about 40 percent of our R&D spending here,” he said at the meeting.
The Cygnus field was the largest gas discovery in the south of the North Sea in 25 years. Once in production it may supply about 5 percent of the U.K.’s gas.
Osborne has sought to encourage the growth of gas over renewable sources of power such as solar and wind, saying industry needs cheap energy supplies to compete. Last month, he won Davey’s support for tax relief for gas drillers, including a 500 million-pound tax allowance to spur investment in large gas fields in shallow waters.
Davey, a Liberal Democrat in the Conservative-led coalition government, is seeking to encourage renewables and prevented Osborne from siding with fellow Conservatives in slashing support for wind energy more than 10 percent. While his priority has been to build the solar and wind industries, his comments ahead of today’s gathering addressed only gas.
“The North Sea remains a vital source of the nation’s energy security,” Davey said in the statement. “The government is determined to maintain the best possible investment environment.”
Osborne will speak at the event today, underscoring his commitment to keep the U.K.’s energy policy stable.
“We have a clear and stable investment regime which allows investors to commit funds with confidence,” he will say, according to excerpts of his remarks released by the Treasury. “We are committed to ensuring that these businesses continue to see the U.K. and the U.K. continental shelf as an attractive location for that investment.”
BP said it’s opening a new research center for advanced materials and committing $100 million over 10 years to encourage research in the subject. It will be based at the University of Manchester, involving academics from University of Cambridge, Imperial College London and the University of Illinois.
“The oil and gas industry’s contribution to our skills base, industrial capacity and strength as an exporter are pivotal,” said Business Secretary Vince Cable, a Liberal Democrat.
The government also said:
-Eni SpA’s Versalis chemical unit will invest as much as 60 million euros ($74.4 million) in expanding elastomer production capacity at its site in Grangemouth, Scotland, aiming to serve makers of automotive tires.
-Neftex Petroleum Consultants Ltd., an Oxfordshire-based consultant for oil explorers, will recruit 50 new graduates to its staff of 80.
-Tangent Technologies Ltd. won contracts worth 105,000 pounds to support two jobs in Plymouth starting in September, where it’s been working for mining companies such as BHP Billiton Ltd and Rio Tinto Plc on making drilling rigs more reliable.
-Melrose Resources Plc, an Edinburgh-based oil explorer, was granted a six-year concession to probe for natural gas in the Kavarna East field in Bulgaria’s portion of the Black Sea.