Labour’s rumoured plan to oppose new North Sea licensing is a “clear and present danger” to energy security, the industry has warned.
And on the BBC’s Good Morning Scotland programme this morning, Offshore Energies UK (OEUK) chief executive David Whitehouse said it risks “importing the energy transition”.
No jobs will be created in the UK as a result of it, Mr Whitehouse added.
He was responding to reports Labour will oppose all new North Sea oil and gas developments.
According to the Sunday Times, Labour leader Sir Keir Starmer is due to unveil his new energy policy at an event in Scotland next month.
UK offshore industry has 200,000 workers with ‘critical skills’
OEUK’s CEO continued: “Sir Keir Starmer has committed to me that Labour would engage meaningfully with the sector.
“I would expect him to fulfill that commitment in the coming days, ahead of any Labour announcement.
“There’s 200,000 (UK) workers in this industry – 90,000 in Scotland. These are the people who powered the UK for the last 50 years. They have the critical skills we need going forward.
“If these reports are true, this is no way to treat people and communities across the UK.”
The offshore energy industry the move to low-carbon but there are not yet enough jobs in renewables, so a multi-year approach to transition is required, Mr Whitehouse said.
Immediate negative impact
One industry insider told Energy Voice, sister website to The Press and Journal, Labour’s plan would have an immediate, negative impact on North Sea firm’s spending.
The unnamed source added: “That rhetoric and those signals they’re sending out are going to have a significant negative impact on investment right now – a clear and present danger for energy security – as a result of what they were saying.
“You’re massively discouraging oil and gas companies from continuing to invest in future low carbon developments, as well as day-to-day production.”
It comes as the industry grapples with the energy profits levy, or windfall tax.
This has already seen an estimated 90% of operators cut spending and financiers including BNP Paribas reduce funding to the sector.
Harbour Energy, the UK’s largest producer, cited UK Government policy for its decision to cut jobs and not invest in the current North Sea licensing round.
Meanwhile, figures published by Aberdeen and Grampian Chamber of Commerce last week also pointed to North Sea operators spending more money outside the UK.
No new North Sea licensing under Labour
A Labour source told the Sunday Times the UK would use “existing oil and gas wells over the coming decades”.
According to the North Sea Transition Authority, the industry’s regulator, current reserves can sustain the UK offshore sector only as far as 203 without new projects being brought online.
Near-field exploration – drilling 0f new wells close to existing infrastrucutre – has been the main driver of discoveries in recent years, facilitated by new licensing.
In a Sky News interview, Shadow Work and Pensions Secretary Jonathan Ashworth said Labour’s plan is not about “shutting down what’s going on at the moment”, but rather ensuring current developments are managed “sustainably”.
‘There isn’t any chance we will become a net exporter again’
The UK currently produces only about half of the gas it uses domestically.
Alex Kemp, professor of petroleum economics at Aberdeen University, said: “We will be a substantial net importer of both oil and gas – particularly of gas – all the way to 2050.
“The CO2 content of that import of gas would be higher than the CO2 content of gas produced domestically.”
“From an economist’s point of view, from my point of view, new field developments should be allowed to go ahead.
“There isn’t any chance we will become a net exporter again – that’s completely out of the question, given the decline rates of existing fields.”
Labour’s rumoured plan will have a negative effect on investors’ perceptions and confidence,” Prof Kemp said, adding: “We will get less employment and taxation from production if it goes down more quickly than it otherwise would.”
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