EnQuest (LON: ENQ) CEO Amjad Bseisu has blasted Labour’s plan to block new North Sea drilling as “economically senseless”.
The head of the independent North Sea operator told The Telegraph that the scheme risks bringing rig shutdowns forward by a decade.
EnQuest has several key producing assets in the UK, though many are ageing like Magnus.
The Telegraph reports that the move would impact the Kraken and Magnus assets’ timeline for shutdown, though EnQuest told Energy Voice that would not be the case.
“A ban on new drilling licenses would have no direct impact on the cessation of production dates at Magnus and Kraken,” EnQuest said in a statement.
” These fields have been in production for many years and their ongoing development, including drilling, is covered by existing production licenses.
“A ban on new drilling licenses would only impact those fields in the UK not yet approved for development.”
It’s understood Mr Bseisu was highlighting the impact on exploration licences, not production consents.
However, it is not clear the extent to such a ban on exploration licences would impact any potential tie-backs to those hubs.
He told the Telegraph: “If the Government [under Labour] said there’s no new field licences, it would be economically senseless.
“It will exacerbate the decline of the industry and actually exacerbate the costs to the taxpayer, because we will have to decommission everything sooner rather than later.
“You drill a well and the well declines. Without drilling another well to extract further production, decline rates will be exacerbated.
“And once you get to a certain level in a field, it becomes uneconomic and you have to go to decommissioning. I would assume, in many cases at least, a decade acceleration in field life.”
Labour has been opaque on its UK North Sea plans, having been lambasted for proposals trailed in the summer to block any new domestic developments.
During a trip to Edinburgh in June, Mr Starmer set out his national mission to boost clean energy, but failed to address uncertainty around the future of the North Sea oil and gas sector.
The firm was reported by the Guardian to have pledged to block the Rosebank oilfield, which it later backtracked on.
Labour leader Sir Keir Starmer vowed to “preserve” North Sea jobs as part of the green energy mix during a trip to Aberdeen in November.
However Mr Bseisu’s comments appear to contradict that.
He said banning new drilling will mean “we will just end up importing more and destroying jobs in the UK”.
A Labour spokesperson said it was proud of its “close working relationship” with the oil and gas sector.
Updated with new statement from EnQuest clarifying impact on Magnus/ Kraken. 10.19am 23/1/24.
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