Miliband overrules officials and bans new North Sea oil exploration

Written by Jonathan Leake on July 16, 2024. Posted in Current News

Ed Miliband has ordered an immediate ban on drilling in new North Sea oil fields in a decision that overrules Energy Department officials and risks triggering a wave of legal action

In an unusual intervention into what is typically an apolitical process, the Energy Secretary has decided that regulators will not approve a round of drilling in new oil fields that was slated for confirmation in the coming weeks.

His decision to block the licences means that companies will have wasted millions of pounds on preparing their bids, with experts warning they are likely to take legal action as a result.

The decision comes after The Telegraph asked for updates on outstanding drilling licence applications.

The applications, from companies seeking to exploit up to 35 new North Sea areas, were submitted as part of the 33rd offshore oil and gas licensing round initiated by the last government in autumn 2023.

It saw 76 oil and gas companies submitting 115 bids to drill for oil and gas across 257 “blocks” of the North Sea, Irish Sea and East Atlantic. The NSTA said these would boost UK oil output by 600 million barrels.

Bids for up to 35 areas were still awaiting a decision from the North Sea Transition Authority (NSTA), the regulator, when the election was called. The NSTA is an arms-length agency overseen by the Energy Department.

On Wednesday afternoon the NSTA said that applications were still being considered, despite the change in Government. A spokesman reiterated the NSTA’s pre-election statement that:

“Further consideration is being given to a small number of remaining applications and a few more may be offered at a later date.”

However, a spokesman for Mr Miliband subsequently said that licences for new fields would not be approved.

In a terse statement issued late on Wednesday, his spokesman said:

“We will not issue new licences to explore new fields, and will not revoke existing oil and gas licences. We will manage existing fields for the entirety of their lifespan.”

Whitehall sources have also made clear that the NSTA’s role and structures are likely to be reviewed and overhauled.

Presiding over new licences would have been deeply embarrassing for Mr Miliband, a committed opponent of oil and gas.

In a debate earlier this year, he said:

“Oil and gas licensing will not reduce energy costs for households and businesses … will not enhance energy security, and offers no plan for the future of the UK’s offshore energy communities.

It will ensure the UK remains at the mercy of petrostates and dictators who control fossil fuel markets and is entirely incompatible with the UK’s international climate change commitments.”

Mr Miliband and Rachel Reeves, the Chancellor, also pledged in opposition to raise taxes on UK oil and gas production profits from 75pc to 78pc and to slash the industry’s investment allowances.

The King’s Speech, at the state opening of Parliament on July 17, is expected to outline more of Labour’s plans for taxing UK oil and gas – including allowing existing fields to keep operating.

That has prompted eco-activists to step up their campaign against oil and gas developments.

On Wednesday activists from Just Stop Oil spread orange paint across three road junctions around Westminster. The group has also threatened to blockade airports through the summer.

Labour’s policies have also attracted widespread criticism from within the energy industry which points out that the UK spent almost £27bn on imports of crude oil and over £21bn on gas imports last year.

One leading analyst said:

“Right now the UK gets 75pc of its total energy from oil and gas and a lot of that already has to be imported.

The remaining North Sea oil and gas fields are absolute treasures and one day they will all be developed. These remaining fields could reduce reliance on imports.”

Oil industry insiders said any attempt to block legitimate licence applications “could result in a legal action for damages” by the affected companies.

Offshore Energies UK, which represents the industry, warned that UK production was already falling at eight percent a year but this would accelerate to 15 percent a year without new drilling – accelerating the surge in imports.

David Whitehouse, chief executive, said:

“We remain deeply concerned that some of the new proposals being put forward for our industry will undermine the energy transition we all want to deliver.

Labour’s leadership has recognised that North Sea oil and gas will be with us for decades to come and they have committed to managing this strategic national asset in a way that does not jeopardise jobs.

They now need to deliver on their commitment to support our industry.”

See more here telegraph.co.uk

Header image: Scottish Daily Express

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