North Sea oil and gas sector push Labour to back licensing rounds
The North Sea oil and gas industry is hoping to convince Labour to back future oil and gas licences on the basis of energy security, and has been holding talks with senior party members – City PM has learned.
Robin Allan, chair of Brindex, the UK trade association representing independent oil and gas companies, confirmed to City PM his group had held talks with Labour.
The industry chief was optimistic the opposition party could soften its stance towards the sector following the government’s unveiling of annual oil and gas licensing rounds in the King’s Speech today.
He argued the move would make the UK’s investment climate more appealing and provide certainty to energy producers.
“We support – and had asked specifically for – annual licensing rounds, and are pleased the government has agreed with our request. We want to work with all political parties to explain and justify the importance of our sector for jobs and the entire industrial community,” Allan said.
He also admitted the group should have been more engaged with Labour in the past, and that it wanted to communicate more with the party over the value of the sector to the UK.
Meanwhile, Gilad Myerson, executive chairman of Ithaca Energy – co-partner in the recently approved Rosebank oil and gas project – confirmed to City PM his company has also held talks with Labour over the future of the North Sea
An industry source told City PM representatives from North Sea oil and gas producers had teamed up with unions to discuss energy policy with Labour frontbenchers.
However, they were less hopeful Labour’s mind could be changed over future oil and gas projects, with the opposition maintaining a firm approach to new developments under Sir Keir Starmer.
This stance was certainly unmoved following the King’s Speech and the passing of the Offshore Petroleum Bill today – which outlined the future licensing rounds.
On social media platform X, formerly known as Twitter, shadow energy security and net zero secretary Ed Miliband slammed the bill, slamming the Conservatives as “out of touch.”
“As millions of families work harder than ever to pay their bills, Rishi Sunak’s Conservatives decided that their response to the cost of living crisis would be legislation that they themselves admit won’t cut household energy bills by a penny,” he said.
When approached for comment, Labour did not deny it had met with industry leaders but confirmed its commitment to shifting the North Sea industry to low carbon energy sources.
A spokesperson said: “Labour is pleased to meet with a wide range of stakeholders across business, industry, investors, and local governance because oil and gas workers and their expertise and experience are vital to delivering future energy security.
“Our plans for clean energy by 2030 will create the high skilled jobs of the future; we are committed to working in partnership to deliver lower bills for families and business and long-term term energy security for our country.”
Government defends UK oil and gas exploration
Downing Street has defended further domestic oil and gas production and exploration in the declining North Sea basin, which has been included in its energy security strategy.
Alongside supply security, it has pointed to the lower emissions profile of domestic fossil fuels compared to overseas supplies, and the economic value of the industry.
Sunak said: “Domestic energy will play a crucial role in the transition to net zero, supporting jobs and economic growth, while also protecting us from the volatility of international markets and diversifying our energy sources. The clarity and certainty that our new legislation will provide will help get the country on the right path for the future.”
The oil and gas sector is set to meet energy secretary Claire Coutinho tomorrow, City PM understands, to discuss the UK’s investment regime.
The government has been fighting on two fronts – facing not just pushback from Labour and climate groups, but also from the industry for bringing in a windfall tax and undermining investment.
Myerson told City PM new exploration is not the priority for UK energy security compared to developing existing opportunities.
He explained that most producers in the North Sea are sitting on many undeveloped discoveries, wary of pursuing them due to the burden of the windfall taxes combined with the uncertainty around further changes to the tax regime.
Myerson said: “I think new exploration licences is the least of people’s concerns, rather it is the development of already discovered reservoirs. For this, the industry needs fiscal stability.
“You don’t want to find yourself legally committed to a project after spending hundreds of millions of dollars, to then be hit by a sudden increase in taxes. We are trying to be as constructive as we can with the regulator and with the government to promote stability.”
Ahead of the King’s Speech, Sunak reportedly toned down proposals to deregulate North Sea oil and gas extraction after civil servants warned that loosening environmental rules would breach international law, according to Bloomberg.
This has been denied by the government.
A department for energy security and net zero spokesperson said: “We don’t recognise these claims. Each annual licensing round will only take place if it meets stringent and robust tests to support this transition, such as making sure the UK is projected to produce less oil and gas than it needs at home.
“The UK remains a global leader on climate – cutting emissions faster than any other G7 country – and we are confident that we will meet our future carbon commitments, including net zero, just as we have over delivered on every carbon target to date.”