It would 'defy belief' for the UK Government to block new North Sea fields while preparing to spend billions increasing Britain’s capacity to import higher-carbon LNG, Aberdeen & Grampian Chamber of Commerce has warned.
The Sunday Times revealed yesterday that ministers are considering intervention to support new LNG import infrastructure as domestic gas production declines.
The plans are contained in a Department for Energy Security and Net Zero paper which warns of risks to security of supply as North Sea output falls.
AGCC said the proposals expose the consequences of government policy after ministers banned new North Sea exploration licences and maintained a headline tax rate of 78% on the industry.
Block North Sea, you get imports
Chief Executive Russell Borthwick said: 'The hypocrisy of efforts to halt new North Sea production has been laid bare by this paper, which should become essential reading for anyone who thinks blocking domestic production means Britain will somehow stop using oil and gas.
'The government admits we will need gas for decades to come, warns explicitly that the North Sea decline threatens our energy security, and is now considering unprecedented intervention to support additional LNG import capacity, potentially costing billions.
'If you block North Sea production, you get imports. It would therefore defy belief for a Prime Minister to block production at Jackdaw and Rosebank – two fields which alone could provide around 10% of our future gas supply – only to then wave in tankers carrying higher-carbon LNG from overseas.
'Climate action should begin with reducing our reliance on imported energy - but it appears that the only oil and gas some politicians and activists object to is our own.'
Figures from the North Sea Transition Authority show imported LNG has a pre-combustion emissions intensity of around 85kgCO2e per barrel of oil equivalent, compared with around 28kgCO2e for UK-produced gas.
'Simple facts being ignored'
Mr Borthwick added: 'The economic case is just as compelling. Every million barrels produced at home supports 90 times more jobs, generates 150 times more employment taxes and more than 400 times more industry taxes than importing the same amount.
'The North Sea decline outlined in this paper is being driven by government policy, not geology. The Energy Profits Levy must go and Jackdaw and Rosebank have to be consented - and they must be the first of many projects which replace imports with cleaner domestic production, protecting jobs, investment and our energy security.'
Steve Gray, whose venture studio Ventex owns a number of supply chain companies operating across the North Sea oil and gas and renewables sectors, added: 'To increase imports of higher-emitting LNG before utilising to resources of Rosebank, Jackdaw and other North Sea fields makes no sense, either economically or environmentally. It is consumption, not production, of fossil fuels that drives carbon emission - a simple fact that seems to be ignored.
'As things stand in the UK, oil and gas production is taxed at 78 per cent, new drilling licences are banned and all activity subjected to the highest of regulatory standards. Unsurprisingly, this is driving down our domestic production to the point where the UK now produces only half of what it consumes.
'We are replacing that production with imported oil and gas which is taxed at 0 per cent, with zero control over how it is produced or regulated. If we are going to use this energy anyway, surely the responsible choice is to produce as much of it as we can here at home, supporting British jobs and paying British taxes, rather than importing a higher-carbon alternative from overseas.'
A spokesman for DESNZ said: 'The North Sea remains a vital national asset, supporting jobs, growth and the UK’s energy security.
'We are delivering a gas system that is fit for the future, maintaining secure supplies, ensuring value for money for consumers and giving the sector the certainty it needs to invest in Britain’s energy.'
Source: Aberdeen and Grampian Chamber of Commerce
