Oil platform in North Sea

UK faces being ‘starved’ of North Sea power, energy boss warns

Image credit: Dreamstime

Oil and gas producer Ithaca Energy has warned that the UK could be ‘starved’ of North Sea energy under proposed energy plans outlined by the Labour Party.

Last week, Labour leader Sir Keir Starmer said the party would grant no licences to explore fresh fields in the North Sea if elected, calling a wait until UK oil and gas runs outs a “historic mistake”.

But Gilad Myerson, executive chairman of Ithaca Energy, which has the bulk of its investment in the North Sea, has warned that such a ban and existing taxation policy were putting off investors and threatening energy security.

Myerson said: “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.

“Politicians keep making statements which spook investors. You have to make sure that the environment is stable because this is a project that will last for 10 years.”

Environmental groups have warned new exploration in the area would see the UK exceed carbon budget limits.

Myerson argued that using North Sea oil and gas domestically means a lower carbon footprint than foreign imports.

“Most of the hydrocarbons in the UK are developed and are produced for the UK market,” he said. “Some of the oil will go to refineries abroad, but will ultimately make its way back to the UK.”

Myerson stressed that “it’s impossible to just turn off a switch and imagine we can live in a world without hydrocarbons”.

The Energy Profits Levy, a windfall tax on energy company profits, was increased to 35 per cent in the Autumn Statement, with the Treasury announcing this month it would remain in place until 2028 unless oil and gas prices fell for a sustained period.

Myerson said the chances of such as drop were “extremely low” after changes in demand following Russia’s invasion of Ukraine.

“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,”

He said Ithaca, which has stakes in six of the largest North Sea fields, was looking at investments in Europe and the US.

Last month, experts at the Energy and Climate Intelligence Unit (ECIU) said hopes to make the UK energy-independent are under threat because of the rapid decline in North Sea gas production coupled with slow-paced policies to cut gas demand.

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