UPDATE:UK Govt Rejects EU Demand To Halt Deep Water Drilling

(Adds industry comment, background.) By James Herron Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The U.K. government Thursday rejected a call from a top European Union official that all deep water oil drilling should be suspended until the cause is known of the rig explosion that triggered a huge oil spill in the Gulf of Mexico. "Unless we are satisfied that the emergency plans for all wells, and in particular those with extreme parameters, represent the absolute best practice we will not consent to drilling," the Department of Energy and Climate Change said in a statement. "But we do not consider that such an approach will result in a de facto moratorium." The government has reviewed what evidence is available about the causes of the oil spill from the BP PLC (BP)-operated well in the Gulf of Mexico and concluded that the current regulatory system is sufficiently robust to guarantee safe operations in deep water areas in the U.K., the DECC said. It has recruited additional drilling rig inspectors to ensure companies are operating in compliance with those regulations, it said. EU Energy Commissioner Guenther Oettinger said Wednesday: "Given the current circumstances, any responsible Government would at present practically freeze new permits for drilling with extreme parameters and conditions." The U.S. government initially imposed a six-month moratorium on deep water drilling in the Gulf of Mexico following the BP spill, but that was later struck down by a Louisiana court. The U.K.'s oil industry lobby group, Oil and Gas U.K., said Oettinger's demands are, "a wholly unjustifiable, knee-jerk reaction to the events in the Gulf of Mexico." "The idea that the EU Commission should be seeking to control the affairs of the U.K. Offshore Safety Division quite frankly concerns me," said Malcolm Webb, chief executive of Oil and Gas U.K. "Furthermore, given that the cause of the incident in the U.S. is still unclear, the rush to judgement and the suggestion of a moratorium on drilling in U.K. waters is, in my view, wholly unwarranted." Most of the U.K.'s oil production is in relatively shallow water compared with BP's leaking Macondo well, which is in 5,000 feet of water. However, the newest area being developed in the North Sea, the West of Shetland region, is in much deeper water. Total SA's (TOT) Laggan discovery, which will be the first major gas development in the region, is in almost 2,000 feet, and Chevron Corp.'s (CVX) Rosebank discovery is in 3,700 feet. Company website: http://www.bp.com -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com (END) Dow Jones Newswires July 08, 2010 12:46 ET (16:46 GMT)