A prominent oil and gas producer has warned that the United Kingdom could potentially be “starved” of energy from the North Sea under the energy plans of the Labour Party.
Labour leader Keir Starmer stated last week that the party would not grant licenses to explore new fields in the North Sea, referring to waiting until the oil and gas in the UK run out as a “historic mistake.”
However, the CEO of Ithaca Energy PLC, which has the majority of its investments in the North Sea, has warned that such a ban and the existing tax policies are deterring investors and jeopardizing energy security.
Gilad Myerson told the BBC, “If a new government believes they can stop licenses and oil development in the UK, it ultimately means they will let the UK starve of energy and become heavily reliant on energy from abroad.
“Politicians continue to make statements that discourage investors. You need to ensure that the environment is stable because this is a project that will last for 10 years.”
Environmental groups have cautioned that new exploration in the area would cause the UK to exceed its carbon budget.
Myerson argued that domestic use of oil and gas from the North Sea results in a lower carbon footprint compared to imports from abroad.
“Most hydrocarbons in the UK are developed and produced for the British market,” he said.
“Some of the oil goes to refineries overseas but ultimately comes back to the United Kingdom.
“It is impossible to simply switch off and imagine that we can live in a world without hydrocarbons.”
The Energy Profits Levy, an unexpected tax on energy company profits, was raised to 35% in the Autumn Statement, and the Treasury announced this month that the levy would remain in effect until 2028 unless oil and gas prices were to decline significantly.
Myerson said that the likelihood of such a decline was “extremely small” after the changes in demand following the Russian invasion of Ukraine.
“The tax regime is constantly changing, and it is very difficult to invest large amounts of capital when you don’t know what kind of return you will get.”
He stated that Ithaca, which has interests in six of the largest fields in the North Sea, is looking into investments in Europe and the US.
