Oil sector cheers plans to boost the North Sea

Nicholas Earl

THE OIL industry has welcomed the government’s decision to bolster the North Sea’s oil and gas sector.

The government has confirmed 100 new oil and gas development licences in British waters, two new carbon capture clusters and a consultation on the industry’s tax regime.

Prime Minister Rishi Sunak argued that he wanted to “power up Britain from Britain” and invest in crucial industries “such as carbon capture and storage, rather than depend on more carbon intensive gas imports from overseas.”

David Whitehouse, chief executive of Offshore Energies UK, praised the latest announcements and warned that without new licences, the domestic oil and gas sector risked a rapid decline –with 180 of the 283 active oil and gas fields in the North Sea set to cease production by the end of the decade.

“The UK needs the churn of new licences to manage production decline in-line with the maturing basin. If we do not replace maturing oil and gas fields with new ones, the rate of production will decline much faster than we can replace them with low carbon alternatives,” he argued.

He believed the new announcements could “help to foster much needed confidence” in the UK’s energy sector, with “an unprecedented amount of private investment” required for the government to meet its net zero targets.

Whitehouse said: “OEUK members share the vision and ambition of all parties on delivering a home-grown energy transition and net zero with potential to spend almost £200bn over the decade. The majority of this could be spent in offshore wind, carbon capture and storage and hydrogen in the right investment environment.” thank him for it.”

Marta Krajewska, director at industry body Energy UK, said carbon capture technology was crucial to the country’s net zero goals.

|These innovative technologies will play an important role for those sectors that will be difficult to decarbonise and there is a genuine opportunity for the UK to lead the world in their development at scale,| she said.

Carbon capture and storage involves obtaining the carbon dioxide produced by power generation and industrial activity, transporting it, and then storing it deep underground, such as in rock formations in the sea bed.

But Farage said “enormous harm” has been done to him in the last few months, adding that he still wants a full apology, compensation and a face-to-face meeting with the bank’s bosses.

“I want to find out how many other people in Coutts or Natwest have had accounts closed because of their political opinions, and I want to make sure this never happens to anybody else ever again. So the fight goes on,” he said.

DOWNING Street’s latest energy announcements yesterday will not lead to a reversal in the controversial windfall tax, despite industry hopes of it being softened to make the country’s investment climate more attractive.

Prime Minister Rishi Sunak appeared to pull a rabbit out of the hat with confirmation of a review of the oil and gas sector’s tax regime, with a potential announcement later this year. This will not , however, mean the windfall tax – first introduced by Sunak and toughened under Chancellor Jeremy Hunt – will be removed any time soon.

In its call for evidence from the industry, the government confirmed that the focus is on the long-term investment climate of the North Sea, and that changes to the Energy Profits Levy will not be considered.

For now, it appears Downing Street considers its recent introduction of a socalled ‘price floor’ – the Energy Security Investment Mechanism – will be sufficient. This withdraws the windfall tax when oil prices decline to $71.40 per barrel and gas prices slide below 54p per therm.

Brent Crude oil is currently priced at $85.10 per barrel, while gas is priced at 67.7p per therm on the UK’s benchmark, well above the thresholds.

In contrast to industry hopes, the consultation will focus on the investment climate beyond March 2028, when the Energy Profits Levy will finally conclude, so the windfall tax should stay until then.

The tax has contributed to North Sea producers pulling out of domestic projects. So far, this includes Total slashing plans to work on an infill well on Elgin this year, Enquest planning to leave its Kraken field in the North Sea to, and Harbour Energy cutting jobs at its Aberdeen base alongside shifting investment to the US and South America.

The country’s fiscal regime for oil producers remains uncompetitive.