Shapps pledges to ‘max out’ North Sea’s oil and gas reserves
The government will “max out” the UK’s remaining reserves of North Sea oil and gas, declared energy security secretary Grant Shapps – describing Labour’s plan to forbid all future development in the area as ‘madness’.
Shapps told The Financial Times the government’s approach was compatible with Britain’s pledge to reach net zero carbon emissions over the next three decades.
He argued that licences should be granted for all viable oil and gasfields, provided this was consistent with the country’s climate ambitions.
The frontbench minister suggested that even if the industry “maxed out” all potential North Sea contracts, the continental shelf was an ageing basin which was running out of hydrocarbons.
“The IPCC [Intergovernmental Panel on Climate Change], who is the global authority on this, says that to meet net zero by 2050 the world needs to reduce its reliance on oil and gas by four per cent a year. Even if we granted every single conceivable licence to the North Sea . . . the [UK’s oil production] would decline at seven per cent a year, twice the rate of the IPCC [recommendations],” he said.
Shapps warned this position “simply doesn’t make sense,” as it would leave the country dependent on costly and more carbon intensive imports from overseas – putting Britain at the mercy of “Putin or anyone else who wants to hold us to ransom.”
He argued the UK has “no option but to carry on buying this stuff” and that he did not understand why it’s acceptable to buy oil and gas from overseas “while denying ourselves the ability to service our own people and economy.
“What Labour foolishly and irresponsibly want to do is deliberately pursue a policy of self-harm by not taking that [North Sea] oil and gas but buying it from abroad,” he said.
The UK has phased out Russian oil and gas imports, but is continuing to rely on overseas suppliers including the Netherlands, Norway, Saudi Arabia and the US.
It has also encouraged investments in liquefied natural gas, with British Gas owner Centrica securing vast import deals with Equinor and Delta Midstream since Russia’s invasion of Ukraine.
The government has also entered into an energy partnership with the US – which includes more than doubling LNG supplies this year.
While the government’s embrace of overseas supplies has been criticised by climate groups, it has also faced scrutiny from the North Sea oil and gas sector.
The industry is facing sustained funding challenges from the toughened windfall tax, which has made lending more complicated, with multiple firms pulling out of domestic projects including Harbour Energy, Enquest and Total this year.
Labour has been approached for comment.