North Sea future

Oil workers ‘are right to worry, but we have a plan’

Daniel Johnson
Daniel Johnson: ‘The transition is a necessity’

Scottish Labour’s economy spokesman Daniel Johnson has said workers in the North Sea oil and gas sector are right to be concerned about jobs, but insisted the party has a plan to manage the energy transition.

He also said the party’s Scottish leader Anas Sarwar was right to refer to the proposed GB Energy company as a generator even though it will not generate any energy of its own.

However, he said the promised cut in energy bills will only be achieved “as quickly as we can”.

Mr Johnson was speaking in response to nearly 200 businesses signing up to a trade union’s campaign against Labour’s policy of refusing to grant new oil and gas licences in the North Sea.

Unite general secretary Sharon Graham said: “Until Labour has a concrete plan for replacing North Sea jobs and ensuring energy security, the ban on new oil and gas exploration licences should not go ahead.

“Labour must not allow oil and gas workers to become this generation’s coal miners. Scotland’s oil and gas communities are crying out for a secure future and that is what Labour must deliver.”

Sir Keir Starmer has rejected claims his proposals will endanger North Sea jobs and shadow energy Secretary Ed Miliband says Labour’s commitment to the sector is “non-negotiable”.

In an interview with Daily Business at the Scottish parliament, Mr Johnson said: “Trade unions and workers are absolutely right to be concerned about jobs in the North Sea.

“However, the transition is with us. It is a necessity. We have 10% or less of the extractable oil left in the North Sea and so we need to secure a future for the tens of thousands of jobs depending on the North Sea energy sector.

“That is why GB Energy is so important. That is why it is so important to secure the billions of pounds of investment so that we can ensure we have the energy sector of the future based around the North Sea, whether that is floating offshore wind, or carbon capture and storage.

“I understand the concern but GB Energy is about securing an energy future and securing the transition and securing well-paid jobs in the North Sea.”

Asked whether Scottish Labour leader Anas Sarwar was wrong to refer twice this month to GB Energy as a generating company, he said: “No, because it will directly invest in energy generating projects.

“GB Energy will be investing in energy generation projects, infrastructure. It will be co-investment.”

He said Labour will cut bills for consumers “by securing reliable access to renewable energy in the future. Ultimately, the future of our energy supply has to be from renewables so the faster and more effectively we can roll that out the better able we will be to (secure) and lower bills.

Asked why energy companies are not making similar promises, he replied: “Because we are in the middle of a transition. Some of these technologies have not been invented. It is about securing the reliability of investment.”

It was pointed out that consumers are expecting lower bills quickly if Labour is elected.

“We will do things as quickly as we possibly can,” he said. “We have set some clear targets. We need to transition from oil and gas.”

Gas bill
Consumers expect lower energy bills

His comments follow those of Shadow Scottish secretary Ian Murray who said: “The skills and expertise of the North Sea are at the heart of Labour’s transformative clean energy plans.

“It’s absolutely right that there needs to be a comprehensive plan on jobs, and that’s exactly what Labour is delivering.”

The latest fall-out over the future of the North Sea came as the boss of one of the UK’s biggest independent oil and gas producers warned that windfall taxes have left Britain second only to being in a “war zone” for planning future investment.

David Latin, chairman of Serica Energy, told shareholders at the company’s annual general meeting that the company was “looking very actively overseas” for opportunities as recent and potential future increases in levies made growth increasingly difficult.

“Other than when I was responsible for a company which had significant assets in a war zone, I have never encountered a situation which was so challenging when it comes to making investment decisions, and planning for the future more generally, as it is in the UK at present.”

Serica is one of three UK producers that earlier this month said they would delay a decision on the £900 million Buchan project in the North Sea amid uncertainty over whether a potential Labour government would impose more punitive windfall taxes.

It has a 30% stake in the project and was due to produce its first oil in 2026 and turn out about 35,000 barrels of oil equivalent per day at its peak.

Labour has said that it would raise the energy profits levy from 75% to 78% and “end loopholes”. Offshore Energy UK, the industry body, said that this had led to uncertainty among energy companies that the party may remove “critical” investment allowances.

Latin, 59, said the company had paid £500 million in taxes to the UK government since 2020. Rather than the energy profits levy being paid by the “oil and gas giants”, it was “in fact independent companies like Serica who are most affected”, he said, pointing to the fact that majors such as BP and Shell generated most of their profits overseas.

A landmark ruling by the Supreme Court last week could also impede investment. In a case brought against Surrey county council for approving six oil wells in Horse Hill, north of Gatwick, the court said that emissions produced by burning fossil fuels should be considered before approving projects to extract them.

Mr Latin said: “We do not take issue with consideration of the environmental impact of planning decisions. Again, however, the choice is not between UK oil and gas or no oil and gas; the choice is UK oil and gas or foreign oil and gas. Global emissions will be no less because the oil or gas is not produced in the UK.”

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