Exclusive:Pressure on Andy Burnham to 'rethink' Labour's oil and gas opposition at 'critical moment' for North Sea
The North Sea industry is pleading with Andy Burnham to end the Labour UK government’s opposition to oil and gas.
Andy Burnham has been urged to “rethink” the UK government’s opposition to North Sea oil and gas - amid a warning “time is running out” to set a different course in order to protect jobs and investment.
Mr Burnham, who is widely expected to become the next prime minister, has been warned by the North Sea industry body that he is facing a “critical moment” in the energy transition, with an appeal for his leadership to embrace both oil and gas and renewables.
Sir Keir Starmer’s government has been heavily criticised for its ban on new North Sea fossil fuel licences and its decision to delay reforms to the energy profits levy until 2030 - with claims it is halting investment in both oil and gas and offshore renewables sectors.
Labour vowed to ban new licences in its manifesto ahead of winning the 2024 general election, pointing to advice from climate scientists and bodies including the International Energy Agency that has stressed no new fossil fuels projects are consistent with global climate targets.
But industry experts are calling on Mr Burnham, if he does enter Downing Street in the coming weeks, to match other European countries and alter the UK’s energy strategy in light of the changing geopolitical landscape.
Mr Burnham said during his Makerfield by-election campaign, which allowed him to return to Westminster, that he had “not completely made a view on the North Sea issue”.
Offshore Energies UK (OEUK) has called on the next prime minister to change course and allow the North Sea to extract the UK’s oil and gas reserves as part of the energy transition to renewables.
Enrique Cornejo, energy policy director for OEUK, told Scotland on Sunday that “the industry has gone through a very difficult period over the last few months and years”.
He said: “The fiscal regime and the regulatory regime have been, particularly over the last few months, put in a very difficult position. We’ve seen increased job losses, reduced supply of domestic oil and gas. That’s really putting at risk the overall infrastructure that sustains our domestic supply.
“When the UK government gets asked about the North Sea, the first thing they say is it’s a mature basin. We’re not questioning that. But then they make it sound like there’s nothing left and it’s almost not worth bothering with it. That’s completely wrong.”
Mr Cornejo added: “I frankly think it’s quite narrow and misleading to say it’s not worth bothering with the North Sea because we pay international prices.
“We’re not asking for any subsidies, we’re not asking for any money. We're asking for projects to be approved. The successive regime to the EPL has been designed. We now need to make sure that is introduced as soon as possible.
“The fiscal regime today, combined with all of these very difficult regulatory processes we have at the moment, is putting the North Sea operators in a very difficult place.”
He warned that the Labour government’s vow to ban new explorations licences ahead of the 2024 general election was “the wrong approach”.
“We are really, here, at a critical point”, he added.
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“Hopefully, whoever ends up in No 10 in the next few weeks really understands and recognises that this is not a polarised debate of whether we either do oil and gas or renewables - we need to do both.
“We really hope there will be an understanding about the fact that energy security is national security and that policies show that the UK government is committed to unlocking our resources of oil and gas.
“If not, investors will take their capital elsewhere. We’re already seeing that and we will continue to see job losses, we’ll continue to see an erosion of the supply chain. It really is a critical moment and an opportunity to get things right.”
Labour’s North Sea strategy has been driven forward by Energy Secretary Ed Miliband, who is also a close ally of Mr Burnham, despite the two not aligning on all issues. Speculation has suggested Mr Miliband could become Mr Burnham’s chancellor, which would hand him responsibility for whether the controversial energy profits levy (EPL) is reformed sooner rather than later.
One North Sea energy company told Scotland on Sunday that “there is a hope we can see a change of direction”, adding that “the next prime minister won’t want to be remembered for overseeing mass deindustrialisation”.
Professor Paul de Leeuw, director of the energy transition institute at Robert Gordon University, has warned that the changing geopolitical landscape, particularly since Russia’s invasion of Ukraine, has meant many countries in Europe including Norway, the Netherlands and Denmark have changed their energy policies in response.
“The world has fundamentally changed”, Prof de Leeuw said.
“The UK is the only country in this part of Europe that hasn’t changed its energy policy yet.”
He added: “It’s absolutely clear the destination is net zero, absolutely clear you need to build out the renewables agenda, absolutely clear it is about a greener and cleaner future. But it’s how you develop that journey.
“It’s not a binary choice. It’s not oil and gas or renewables - we need it all. We need a balanced energy mix.”
Prof de Leeuw said that if politicians can get the energy transition right, “you can keep the supply chain here, the jobs here, the energy here”.
He said: “The opportunity is on our doorstep. We’ve got the workforce, the Aberdeen ecosystem, the capability. Everything is in place. But it’s just not happening. To a new Holyrood government, Westminster government, it should be on their radar.
“The world has changed, other countries are changing. The question we ask ourselves is how do we make sure we have an energy policy fit for a G7 nation.”
Mr Burnham has also come under pressure from trade unions to plot a new energy strategy for the North Sea amid severe and repeated concerns over job losses.
GMB Scotland, one of the biggest unions across oil, gas, nuclear and renewables has urged the next prime minister to halt his government’s “rushed and needless” run down of the North Sea.
Louise Gilmour, GMB Scotland secretary, has described the Labour UK government’s ban on new drilling is “an act of economic self-harm”.
She said: “The new prime minister will have a clear opportunity to break with the past and take a new course and, on energy, that cannot come soon enough.
“We cannot continue careering towards net zero without a realistic, achievable plan capable of reducing emissions while managing the clear and immediate risks to our economy and communities.”
She added: “For two years, ministers at Westminster and Holyrood have promised green jobs tomorrow while an industrial calamity unfolds today. A hard reset is urgently needed.
“The arrival of a new prime minister with new ideas and a willingness to listen to new voices is a clear opportunity for this government to pause, take a breath, and think again.
“Our country needs a transition to renewable energy that is strategic, measured and realistic.
“That transition can only be built on a plan that creates a strong, reliable energy mix and bolsters our energy security while, crucially, protects jobs, skills and communities.”
Mr Burnham was approached for comment by Scotland on Sunday.
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