UK’s offshore energy seeks North Sea oil & gas policy U-turn to unlock multi-billion investments

Britain’s trade body for the offshore energy industry, Offshore Energies UK (OEUK), has emphasized the importance of a policy reset for the North Sea oil and gas arena for the UK government to secure billions in energy investments and curtail the nation’s dependence on imports.

The calls to scrap the energy profits levy (EPL) have been growing to establish a path toward a fiscal regime that supports responsible domestic oil and gas production, unlocks investment, and ensures fair return to the Treasury when prices are high. According to OEUK’s Chief Executive, an early visit by Prime Minister Andy Burnham to meet North Sea energy operators and their workforce could mark a crucial turning point in government attitudes towards home-grown energy and the future of the offshore industry.

David WhitehouseChief Executive of Offshore Energies UK, commented: “The UK will still need oil and gas for decades to come. The question is whether we produce as much of that energy as possible here — supporting our own jobs, communities and economy — or rely increasingly on imports while exporting investment and economic value overseas. Government policy should back North Sea production as part of a secure and managed energy transition.

“Energy policy cannot be made in Westminster alone without listening to the people and communities who have powered this country for the last 50 years. For too long, offshore workers, engineers, technicians and those across the energy supply chain have been talked about rather than listened to. A visit to meet the North Sea workforce would demonstrate that the new government intends to build a different relationship with the people and communities at the heart of Britain’s energy system.”

As a result, OEUK has requested an urgent prime ministerial visit to operators in Scotland and supply chains in the Northeast of England, arguing that energy production must be incentivized ahead of increasing reliance on imported oil and gas.

Offshore Energies UK is adamant that the choice is not between oil and gas and clean energy, but whether the country can produce the energy it needs with its own workers and supply chains or import more from overseas at higher costs and emissions.

Whitehouse underlined: “The new Prime Minister must now turn listening into action. Words of support for projects such as Jackdaw and Rosebank cannot be a substitute for the policy reset our country needs.

“The new government must back North Sea oil and gas over increased reliance on imports — delivering the fiscal and regulatory reforms required to unlock investment, protect domestic jobs, strengthen energy security and support the energy transition.”

OEUK highlights that using imported liquefied natural gas (LNG) from America or Qatar, which is increasingly being used to replace North Sea gas, involves carbon emissions that are four times higher.

Britain’s trade body for the offshore energy industry reminds that its analysis shows a reset addressing reform of the regulatory and tax framework for the North Sea industry, including early implementation of the government’s proposed Oil and Gas Price Mechanism (OGPM), could unlock £50 billion ($67-68 billion) in oil and gas investment.

Offshore Energies UK further underlines that over the next decade alone this would increase capital investment by £26 billion ($35–36 billion) and boost tax receipts by more than £13 billion ($17.5–18 billion), support tens of thousands of jobs, and help the nation meet at least half of its oil and gas needs from domestic production between now and 2050.

In addition, faster reform could cut the imported LNG share of UK gas supplies to 6% by 2035, compared with 46% without reform. Independent polling data from Opinium earlier this month underscored that the government’s own supporters were looking for a reset on energy policy from the new prime minister.

Labour voters favor scrapping the ban on exploration and following Norway’s pragmatic approach to new licenses by 42% to 35%, with almost 70% of these voters saying the UK should prioritize North Sea oil and gas production compared to just 9% who said it does not matter where oil and gas comes from.

This means that more than seven out of ten people think Britain should produce oil and gas in its own waters rather than rely on imports from abroad.

Whitehouse noted: “This compelling new data shows that the British public are looking for huge change in energy policy from the new Prime Minister. Declining homegrown oil and gas production in the North Sea has increased UK exposure to imports and geopolitical risk. The voters have had enough.

“All corners of the UK population are looking for change from Andy Burnham, including the government’s own core supporters. Almost 70% of Labour voters said that the UK should continue producing oil and gas in the North Sea rather than rely on imports compared to just 9% who said it doesn’t matter where it comes from.”