According to a media report, the opposition Labour Party is considering a ban on new oil and gas drilling in the British North Sea. According to a report in the Times, party leader Keir Starmer wants to stop the exploitation of new extraction sites and invest more in renewable energies if he wins the election next year. In Scotland in particular, the oil and gas production industry is an important employer.
Philip Plickert
Business correspondent based in London.
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Energy Secretary Grant Shapps of the ruling Tory Conservative government accused Labour on Monday of an "ideological feud" against the oil industry. The government, on the other hand, is acting pragmatically by issuing new drilling licenses, according to him. The North Sea Transition Authority (NSTA) has received 115 bids from 76 companies in the current auction round for new production licenses. However, some companies, such as Harbour Energy, complain that the high special profits tax makes investments in British exploration unattractive.
Expansion of renewables to create half a million jobs
Britain's gas industry produces about 45 percent of the Kingdom's consumption in the North Sea, with oil production covering a smaller portion of consumption. Companies such as BP, Shell, Harbour Energy, Norway's Equinor and others directly employ about 20,000 people to extract fossil fuels in British waters. Together with suppliers and the equipment and engineering industry, the industry accounts for an estimated 200,000 jobs, more than half of them in Scotland.
According to the Sunday Times, Labour's party leader Starmer plans to announce a green transition in a keynote speech on energy policy in June. The expansion of renewables is expected to create half a million jobs, according to the party. The ruling Scottish National Party (SNP) in Edinburgh has also spoken out against the expansion of new oil and gas production. Regional Prime Minister Humza Yousaf spoke of a "moral imperative". Paul de Leeuw, director of the Energy Transition Institute at Robert Gordon University in Aberdeen, called Starmer's plans to halt new exploration and the promise of new jobs "quite naïve." The announcement alone will undermine investor confidence.
Dispute over Rosebank oil and gas field in the North Atlantic
Production in the British North Sea has been declining for years. Compared to its peak in 1999, oil and gas production has fallen by two-thirds and now stands at about 1.5 million barrels a day. Oil production has fallen by a good quarter in the past five years. Without new large-scale exploration, it would decline dramatically over the next decade. Currently, licenses have been issued for the large Combo and Jackdaw oil fields.
Particularly controversial is the Rosebank oil and gas field in the North Atlantic, west of the Shetland Islands. Up to 500,000 barrels of oil could be produced there. Environmental and climate groups want to prevent the government in London from giving the Norwegian Equinor group permission to develop Rosebank. The UK has made a legal commitment to meet the net-zero emissions target by 2050. Some experts, however, see potential advantages in domestic oil and gas production, which causes lower CO2 emissions than importing oil and gas from other countries. This is also the argument of the regulatory authority NSTA.