UK energy import bill surges as investment falters
Britain saw its energy import bill surge to £117 billion last year – more than double 2021’s total of £54 billion and the first time it has broken through £100bn.
Offshore Energies UK, which reveals the figure in its Business Outlook Report, warns that this could become the norm if the windfall tax deterring investment in the North Sea is not modified.
The cost equates to £4,200 per UK household, with the findings coming as MPs prepare for a Commons debate tomorrow (Thursday) on the UK’s ‘energy trilemma’ – the balance between energy security, costs, and environmental impacts.
OEUK’s report will say that the surge in imports was driven partly by global price rises linked to the Ukraine conflict but also by inflation and higher worldwide demand after the pandemic.
The weakness of the UK economy and sterling was also a key factor because oil is valued in US dollars. The pound was worth up to $1.40 in 2021 but is now hovering around $1.20 – so each pound buys less.
Office for National Statistics data shows that energy imports from Norway alone went from £13bn in 2019 to £41bn in 2022. The UK is now reliant on Norway for more than 30% of its gas.
OEUK’s report will warn that allowing the UK’s reliance on imports to grow further risks similar bills in this and future years – and will undermine the nation’s energy security as well as its economy.
The report will also say that the UK’s North Sea still has oil and gas reserves equivalent to 15 billion barrels of oil – enough to support the nation’s needs for the three decades needed to build the offshore wind and other low carbon energy systems essential to power the future.
Ross Dornan, OEUK’s markets intelligence manager, who led the team that wrote this year’s Business Outlook report, said: “Our report argues that it will be better for our energy security and for the economy, to get as much of that oil and gas from our own North Sea as we can – rather than import it.”
David Whitehouse, OEUK’s chief executive, said: “The windfall tax levied last year, now means UK offshore oil and gas operators are paying a total tax rate of 75%, – one of the highest rates in the world and over three times the rate of conventional UK businesses.
“This level of tax discourages investment and undermines our companies, our jobs and our communities.
“As our Business Outlook report will show, many offshore operators are already cutting North Sea investment because of those taxes.
“That means oil and gas production will fall, we’ll lose skilled workers – and imports will have to increase to make up for the lost production.”