Energy secretary Kwasi Kwarteng has insisted the UK Government will not bend to the will of activists who “naively want us to extinguish production” of oil and gas in the North Sea.
In an open letter to the industry he added: “Doing so would put energy security and British jobs at risk, and simply increases foreign imports, whilst not reducing demand.”
The letter is a strong show of support for continued and indeed accelerated oil and gas production in the UK North Sea.
But it came with a caveat – the sector must show “in the coming weeks” how it will reinvest profits and double down on investments in the clean energy transition, as well as accelerate and maximise domestic oil and gas production.
Mr Kwarteng said: “The North Sea has provided the UK with a stable domestic supply of oil and gas for the last 50 years and it has a bright future.
“This great national asset has had the dual purpose of securing supply and insulating the UK from developing a dependency on Russian hydrocarbons.
“It has also generated substantial tax revenue to the tune of £375 billion to fund for our vital public services.”
The North Sea is vital to our energy security, so I will launch another licensing round later this year.
In return, I want oil and gas companies to reinvest their profits into the UK so we all feel the benefit – jobs, growth, new clean energy technology.
I think that’s fair. pic.twitter.com/9WWKFhKhzY
— Kwasi Kwarteng (@KwasiKwarteng) May 1, 2022
He added: “As the prime minister and I set out in the Energy Security Strategy, domestic production is now more important than ever, recognising there will be an ongoing demand for oil and gas over the coming decades as we smooth the transition
to cheap, clean, home-grown energy.
“That is why we took steps to remove obstacles to accelerate production and confirmed the NSTA (North Sea Transition Authority) plans to launch another North Sea licensing round in the autumn, taking into account the forthcoming climate compatibility checkpoint and the need for domestic energy security.
“Scaling up, accelerating and investing in home-grown energy production will support us in continuing to grow the British economy, create good jobs across the country, and crucially bring down consumer bills in the long-term.”
Windfall tax alternative
The government is facing pressure from opposition parties to introduce a windfall tax on oil and gas firms, using some of their profits to help alleviate the cost of living crisis.
Outlining ambitions for a different approach, Mr Kwarteng said: “In return for the UK Government’s ongoing support for the sector, the prime minister, the chancellor and I want to see a very clear plan from the oil and gas industry to reinvest profits in the North Sea and, importantly, in the clean energy technologies of the future.
“At our next meeting in coming weeks, I would like you to set out how you will reinvest profits, double down on investments in the clean energy transition and importantly accelerate and maximise domestic oil and gas production.
“We need to collectively show the British people how the success of our offshore oil and gas sector has a direct and enduring benefit to the British economy and people’s jobs and livelihoods, in order to protect the North Sea as a major UK energy asset for decades to come.”
Ending the letter, the minister said: “I look forward to our discussion, and to continuing to work with you as we make the North Sea transition a truly British success story.”
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