THE UK is at risk of being “starved” of North Sea oil and gas – leaving it reliant on imports, a major producer warned today.
Ithaca Energy also said Labour’s pledge to ban new oil and gas exploration in British waters and the current tax policy for the sector were “spooking” investors.
Last week, Sir Keir Starmer said a future Labour government would not grant licences to explore new offshore fields, saying it would be an “historic mistake” to wait until UK oil and gas runs out.
But Gilad Myerson, executive chairman of Ithaca, told the BBC that the move would threaten the UK’s energy security.
“By a new government imagining they’ll be able to stop licences and oil development in the UK, ultimately what that means is that they’ll be starving the UK of energy, and it will become very dependent on energy from abroad,” he said.
North Sea oil and gas is traded on international markets and the prices are set globally, but Mr Myerson insists much of it is used domestically, and it therefore has a lower carbon footprint than energy imported from abroad.
“Most of the hydrocarbons in the UK are developed and are produced for the UK market. Some of the oil will go to refineries abroad, but will ultimately make its way back to the UK,” he said.
A Labour spokesperson said that while the party would not issue any new licences, it would “continue to use existing fields in the North Sea for decades to come”.
Leading Aberdeen entrepreneur Sir Ian Wood warned last week that Labour’s oil and gas strategy could threaten tens of thousands of jobs. He described the controversial plan to ban future hydrocarbon licences as “very concerning”.
However, Sir Ian also said Labour’s ambition to make the UK a clean energy superpower was “laudable”.
Ithaca, which has stakes in six of the 10 largest oil and gas fields in the North Sea, is also worried about the current government’s approach to taxation.
75% tax
Westminster has introduced a windfall tax on oil and gas producers, taking the overall tax rate to 75%.
Earlier this month, the Treasury said the levy would stay in place until 2028 but would be scrapped if oil and gas prices fell closer to historical levels for a sustained period.
But Mr Myerson said the chances of oil and gas prices dropping sufficiently to trigger the elimination of the tax were “extremely low” as supply and demand had changed after the Russian invasion of Ukraine.
“At the moment, the taxation regime is changing constantly and it’s very difficult to invest huge amounts of capital when you don’t know what type of return you’ll be getting,” the chairman said, adding that Ithaca was considering investing elsewhere in Europe and the US, whom he said were “more supportive” to oil and gas.
He said the company was still committed to investing in two of the biggest undeveloped oil fields in the North Sea – Cambo and Rosebank.
But Mr Myerson said they would only be developed if it made financial sense, and said political announcements from all sides had been unhelpful.
“Politicians keep making statements which spook investors.
“They are saying they do want hydrocarbons, then they say that they don’t want hydrocarbons. When it comes to a project like Cambo and Rosebank, you need to make sure that the environment is stable because this is a project that will last for 10 years.”
One of the chairman’s biggest concerns is around job losses if the North Sea sees no further investment. He believes it is unrealistic to expect someone working on an oil platform to be able to install a wind farm as they would not have the technical expertise.
My Myerson agrees that wind and solar are important technologies and Ithaca is looking to invest in them as well, but he added: “It’s impossible to just turn off a switch and imagine we can live in a world without hydrocarbons.”
