Truss tipped to approve North Sea licences
Liz Truss risks stirring up a new confrontation with climate change campaigners by approving a number of oil and gas drilling licences in the North Sea if she moves into Downing Street next week.
In one of her first acts as prime minister she will declare her desire to secure the UK’s energy supplies, though it will not have any immediate impact on soaring bills.
As many as 130 licences will be issued and could be announced soon after finance leaders meet in Edinburgh for an update on progress towards the COP26 objectives.
Business Secretary Kwasi Kwarteng – expected to be appointed Chancellor – and the Brexit Opportunities minister Jacob Rees-Mogg, who is likely to be his successor, have held a series of meetings with oil and gas companies to encourage more domestic output, reports The Times.
These meetings follow pressure on energy firms from former Chancellor Rishi Sunak to raise production to avoid facing further windfall taxes. Mr Sunak’s energy profits levy, announced in response to rising energy bills, included an 80% allowance to boost investment in North Sea extraction. The industry is opposed to further taxes as a condition for increasing production.
Mr Kwarteng wrote to North Sea oil and gas firms at the end of April demanding they reinvest profits in accelerating production of oil and gas to reduce the UK’s dependency on imports, and in the clean energy technologies.
The North Sea, although in long term decline, still contains oil and gas equivalent to about 15 billion barrels, of which about a billon barrels of oil is consumed domestically, according to figures from the North Sea Transition Authority.
A number of companies, including Anglo-French company Perenco, BP and TotalEnergies, another French company, are hoping to increase production.
Ms Truss is likely to support plans by Equinor, the Norwegian state energy company, to extract 70,000 barrels of oil a day from the Rosebank field which it claims will meet 8% of British production by the end of the decade.
Shell has received permission to extract oil from the Jackdaw site, but this is now caught up in a legal case brought by Greenpeace.
The latest scramble to boost production comes as YouGov poll for The Times indicated that nearly half of Tory voters backed the renationalisation of the energy industry, with one in four people saying they could not heat their homes this winter.
Ben van Beurden, chief executive of Shell, Europe’s biggest oil and gas company, said yesterday that he did “not think this crisis is going to be limited to just one winter”.
Mike Tholen, Offshore Energies UK’s sustainability director, said: “The UK’s homes and businesses cannot do without these fuels so if the nation stopped producing oil and gas, it would just have to import them. The only alternative would be cold homes, electricity shortages and transport limited largely to bikes and walking.”
There is a scramble across Europe for dwindling supplies. Ursula von der Leyen, president of the European Commission, said yesterday that the bloc was preparing to reform the continent’s electricity market.
Outgoing Prime Minister Boris Johnson has an advocate for nuclear and wind power which are helping keep down prices in France.
Chancellor Nadhim Zahawi is in the US to discuss global economic pressures with counterparts in the US Government and leading international economic and financial institutions.
During visits to New York and Washington DC this week, Mr Zahawi will stress the need for continued collaboration with the UK’s international partners and allies such as the US to tackle the issues that are causing rising prices and slower growth across world economies.
Mr Zahawi is expected to indicate a desire for increased civil nuclear cooperation and closer working between the UK and US nuclear industries on developing technologies, such as small and advanced modular reactors.
Discussions will also be held on furthering sanctions against Russia in response to Putin’s war of aggression against Ukraine.