The UK is at risk of being “starved” of North Sea energy leaving it reliant on imports, a major oil and gas producer has told the BBC. Ithaca Energy said Labour’s pledge to ban new oil and gas exploration in the North Sea and current taxation policy was “spooking” investors.
Ithaca is almost entirely invested in North Sea oil and gas.
Environmental groups and scientists say new oil and gas fields would take the UK over its carbon budget limits.
Last week, Labour leader Sir Keir Starmer said a Labour government would not grant licences to explore new fields in the North Sea, saying it would be an “historic mistake” to wait until UK oil and gas runs out.
But Gilad Myerson, executive chairman of Ithaca, said the move would threaten the UK’s energy security. “By a new government imagining they’ll be able to stop licences and oil development in the UK, ultimately what that means is that they’ll be starving the UK of energy, and it will become very dependent on energy from abroad,” he said.
North Sea oil and gas is traded on international markets and the prices are set globally, but Mr Myerson insists much of it is used domestically, and it therefore has a lower carbon footprint than energy imported from abroad.
“Most of the hydrocarbons in the UK are developed and are produced for the UK market. Some of the oil will go to refineries abroad, but will ultimately make its way back to the UK,” he said.
A Labour spokesperson said that while the party would not issue any new licences, it would “continue to use existing fields in the North Sea for decades to come. The best way to bring down bills, increase our security and sovereignty, and create good jobs is to get on with a sprint for clean energy and we welcome all businesses being part of that.”
Ithaca, which has stakes in six of the 10 largest oil and gas fields in the North Sea, is also worried about the current government’s approach to taxation.
Last May, the government introduced a windfall tax on energy company profits, known as the Energy Profits Levy. It was set at 25%, but was later increased to 35% in the Autumn Statement, taking the overall tax rate on companies in the sector to 75%.
Earlier this month, the Treasury announced the windfall tax would stay in place until 2028 but would be scrapped if oil and gas prices fell closer to historical levels for a sustained period.
But Mr Myerson said the chances of oil and gas prices falling sufficiently to trigger the elimination of the tax were “extremely low” as supply and demand had changed after the Russian invasion of Ukraine.