As the Conservatives gather for their Scottish Party conference this weekend, minds will again be focused on our industry which provides jobs for nearly 100,000 people in Scotland and makes an annual contribution to the Scottish economy of around £19 billion.
The UK has been through unprecedented challenging times. Following on from the global pandemic and Putin’s invasion of Ukraine, the unprecedented cost-of-living crisis has caused further pain. Every sector had to play its part.
The taxes paid by our industry have helped the Government support households up and down the country.
The Spring Budget next week is another critical moment for the future of investment in our homegrown energy transition, and anchoring the skills and companies needed to deliver this.
Policy decisions made by all parties in this general election year will define the shape of this economy for decades to come.
Meanwhile, at the Scottish Conservative conference in Aberdeen this weekend, OEUK will continue to make the case that we must unlock investment in the sector.
Energy prices are trending down. Oil and gas prices are in line with where they were before the Ukraine war, and the energy price cap is also the lowest it has been in two years.
Industry spending is at historic lows. This is influenced in part by the introduction of the Energy Profits Levy in May 2022, which taxes UK oil and gas production at 75%.
Uncertainty over the future of North Sea taxation continues to undermine investor confidence.
The UK is now producing less energy and importing more than at any point in the last 40 years. Oil and gas production volumes in the North Sea fell by 12% last year alone.
This decline in the production of North Sea oil and gas is not matched by a fall in demand. In a volatile world, this is the wrong path. We need to produce more energy here.
There is hope. OEUK’s industry manifesto published earlier this week set out the case for a homegrown energy transition.
That’s investment in oil and gas while we need it, and wind, hydrogen, and carbon capture and storage.
Producing as much energy as we can here instead of relying completely on imports will help the UK get to net zero in a way that grows the economy, protects jobs and ensures secure supplies of energy.
Our calculations show £200 billion of earmarked new investment split between oil and gas and renewables, is sitting on company books waiting for the green light.
Our industry has consistently argued that when windfall conditions fall away, so should windfall taxes and it was good to see support from the Scottish Chambers of Commerce on this ahead of next week’s Budget.
Energy businesses need stability and a clear signal that they can make a return on North Sea investment to stay here in the UK.
This is a long-term game with high stakes – many thousands of jobs and many billions in economic value to the UK economy are in the balance.
So, to help provide at least some confidence, OEUK has been calling for the Chancellor to put his words into law and confirm that the profit levy will be removed as prices fall.
It is regularly pointed out that the government’s Office for Budget Responsibility (OBR) has calculated the energy transition will cost £1.4 trillion.
The lion’s share of this must come from the private sector. Giving firms the headroom to make these huge investments is vital.
Ahead of next week’s Budget, OEUK’s message is clear: this can and must be a budget for a homegrown energy transition.
We can help with all of this, but policymakers must make that choice – to unlock investment in a homegrown energy transition that leaves no one behind.
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