Prime Minister Rishi Sunak has pledged hundreds of new oil and gas licences, two new carbon capture clusters and a fiscal review on the sector’s tax regime, in a bid to woo the North Sea industry.
Downing Street has teamed up with industry regulator, the North Sea Transition Authority (NSTA), to announce a joint commitment to undertake future licensing rounds.
Read More:- 3 Companies That Could Be Worth $1 Trillion by 2030
Licences could also be offered near to currently licensed areas, which can be brought online faster due to existing infrastructure and previous relevant assessments.
The government has also confirmed two leading carbon capture usage and storage projects (CCUS), Acorn in North East Scotland and Viking in the Humber, have been chosen as the third and fourth clusters in the UK.
It has already committed £20bn in funding for early development of CCUS, shortlisting eight projects for financial support across two industrial clusters which will be activated by the mid-2020s – the HyNet cluster in North West England and North Wales, and the East Coast Cluster in the Teesside and Humber.
Together, these four clusters could support up to 50,000 jobs in the UK by 2030, with the government targeting an annual reduction of 20-30Mt of carbon captured and stored by the end of the decade.
The Prime Minister has also tasked regulators and government departments to work together on how to make the most of offshore resources to boost CCUS and hydrogen opportunities.
This includes a call for evidence across the industry on the tax regime for the oil and gas sector, in a bid to develop a long-term fiscal regime which is predictable and supports investment.
Read More:- Ford recalls over 150,000 vehicles including Transit Connects and Escapes
It will be open to submissions until 11 September 2023, with the government set to publish its conclusions to the oil and gas fiscal review by the end of the year.
The industry has routinely criticised the government’s windfall tax, warning it deters investment and undermines energy security.
Environmental benefits to domestic oil and gas
Downing Street hopes today’s pledges will slow the rapid decline in domestic production of oil and gas, which is expected to halve over the current decade, to reduce the UK’s reliance on hostile states to meet its energy needs, while protecting more than 200,000 jobs in the industry.
There are also environmental benefits, with new analysis released by the NSTA today showing that the carbon footprint of domestic gas production is around one-quarter of the carbon footprint of imported liquified natural gas.
Read More:- One manufacturing giant has avoided layoffs for 70 years and still earns billions
This follows the latest report from the Climate Change Committee this summer, which still predicts a quarter of the country’s energy demand will still be met by oil and gas, even if the UK reaches net zero in 2050.
The NSTA is currently running the 33rd offshore oil and gas licensing round, expecting the first of the new licences to be awarded in the autumn, with over 100 licences in total.
Future licences will also be needed for CCUS and hydrogen opportunities, with the government targeting offshore energy hubs that make the best use of established infrastructure and repurposed legacy fossil fuel projects.
Sunak said: “We’re choosing to power up Britain from Britain and invest in crucial industries such as carbon capture and storage, rather than depend on more carbon intensive gas imports from overseas – which will support thousands of skilled jobs, unlock further opportunities for green technologies and grow the economy.
“The UK’s oil and gas industry are also vital to driving forward and investing in clean technologies that we need to realise our net zero target, like carbon capture usage and storage, by drawing from the sector’s existing supply chains, expertise and key skills whilst protecting jobs.”
Shapps pledges to ‘max out’ North Sea’s oil and gas reserves
