Today OEUK's CEO David Whitehouse features in The Times on the current situation in the Middle East and at home.
Conflict in the Middle East has highlighted again the growing challenge of where and how we get our energy. There are inescapable real-world consequences for our security of supply.
Oil and gas provide three quarters of the UK’s total energy, critical industrial manufacturing and the electricity grid itself depend on it. We are transitioning towards greater use of renewables but we also have an inevitable demand for oil and gas. The question is not whether we need or will continue to use oil and gas, but where it will come from and what this means for our future security, emissions and economy?
North Sea production supports about half of our oil and gas needs today. It is estimated the country’s future demand will be 13 to 15 billion barrels of oil and gas up to 2050. With the right investment conditions and support for pragmatic energy policies, we can meet up to half of that demand from our North Sea.
The alternative is to increase imports. Liquified natural gas would be part of that supply alongside natural gas from Norway. While LNG provides our energy system with beneficial flexibilities, replacing homegrown natural gas with more LNG is not a good bet.
The Iran war has exposed the volatilities facing countries reliant on LNG imports. Left unchallenged, it would almost certainly mean three future scenarios for the UK: diminished security over gas supplies; loss of investment and revenue to the rest of the world; and the offshoring of our production and transportation emissions.
A solution is to back homegrown energy. This is not about locking in more oil and gas, but safeguarding from intensifying global competition and geopolitical volatilities. It is also about maximising the opportunities of a homegrown energy transition: investment, revenue, jobs and security.
The energy profits levy was introduced as a temporary tax to exceptional market conditions because of Putin’s war in Ukraine but it is eroding investor confidence and future revenues and costing jobs.
That’s why we are asking ministers to bring forward the oil and gas pricing mechanism, a permanent, revenue-based tax on UK oil and gas that ensures the industry pays high rates of tax when prices are high but protects and promotes investment when prices are low.
This is better for the UK taxpayer, and sends a strong signal that in a precarious world we are depolarising the energy debate and building consensus for a modern industrial Britain, secured by homegrown energy. Let’s grasp the opportunity.
Source: OEUK
