The UK’s offshore energy industry has warned Labour against 'simplistic' proposals to end new licenses for oil and gas – and repeated its plea for the party to engage further with industry.
Offshore Energies UK (OEUK) issued its warning after reports in The Sunday Times that 'Sir Keir Starmer will announce plans to block all new North Sea oil and gas developments.'
The article was accompanied by a leader column warning Labour of the dangers of such a move, including soaring reliance on imports, increased import bills, and reduced energy security. The Sunday Times leader pointed out that the UK gets 75% of its total energy from oil and gas – so having its own supplies was a vital bulwark against future global shortages.
OEUK said Labour should take a more collaborative approach to the UK’s offshore industry. It pointed to the approach of the US, Norway and many countries in the Middle East which are working with their own energy sectors to support domestic supplies – while also capitalising on the industry’s expertise to expand low carbon technologies like wind, and mass hydrogen production.
The oil and gas industry remains essential for UK consumers’ energy security. About 24 million UK homes rely on gas boilers for heat and hot water and the nation has 32 million vehicles running on petrol or diesel. About 42% of the UK’s electricity comes from gas-fired power stations.
The UK offshore sector is also vital for the nation’s economic well-being, supporting over 200,000 skilled jobs across the country and adding over £20 billion to the economy this year alone. It paid an estimated £11 billion in taxes in the 2022/23 fiscal year.
OEUK’s recent Business Outlook Report warned that political tensions and uncertainties over the sector’s future are making investment by companies in oil and gas ever harder to secure. The sector has consistently warned that without new investment in domestic production, by 2030 the UK will be forced to import 80% of its oil and gas compared to around half now.
David Whitehouse, OEUK’s chief executive, said: 'People wouldn’t forgive anyone who shut down Britain’s oil and gas industry only to replace it with imports of foreign oil and gas. Everyone is clear that the energy system must change but business and government must do this in partnership. Labour’s approach risks sending the wrong signals.
'Labour’s proposals are also very unclear, especially on costs. Our sector now needs clarity on the detail of Labour’s plans including analysis on what they mean for jobs, energy security, imports, and Britain’s overall economy.
'Homegrown production of oil and gas means we avoid costlier, less secure, and higher carbon footprint imports. Investment in UK production would also support the infrastructure and workforces needed to make cleaner, more affordable energy in the UK, for the UK.
'As we build that future there is no simple choice between oil and gas on the one hand and renewables on the other. The reality is that to keep the lights on and grow our economy, we will need both. By the mid-2030s, oil and gas will still provide for 50% of our energy needs.
'We urge Sir Keir Starmer and Rachel Reeves to fulfil their promise to listen to industry and engage with our workers. We need to meet our climate goals but without undermining UK energy security, the economy and our skilled workforces – the very people needed to deliver lower carbon, secure and affordable energy.'
Source: OEUK
