Britain’s oil and gas industry body called for new drilling licenses in the North Sea and rapid investment in the sector to mitigate the impact of high prices on consumers as the country grapples with the worst energy crisis in decades.
The incoming UK Prime Minister Liz Truss has vowed to act immediately to help people cope with surging energy bills that threaten to leave many unable to heat their homes this winter and said during her campaign she would seek to extract more oil and gas from the North Sea.
The benchmark European gas price has quadrupled in the last year due to a war in Ukraine, sanctions on Russia and the aftermath of the coronavirus pandemic.
Offshore Energies UK (OEUK), an industry body for offshore oil, gas, hydrogen and wind producers, warned that Britain could face potential energy shortages this winter while global prices could remain high for at least three years.
“The best way for the UK to ensure secure gas and oil supplies is by increased investment in its own resources,” said Ross Dornan, OEUK’s market intelligence manager.
Gas production in the United Kingdom rose 26% in the first half of 2022 compared to the same period last year, buoyed by new projects off England’s east coast.
OEUK said in a report published on Wednesday that the increase could be “short-lived” without a surge in investment. The industrial body sees a potential for 26 billion pound ($30 billion)capital investment in oil and gas sector by 2030.
Britain is not directly reliant on Russian gas imports, but its connectivity to the European countries through pipelines and its imports of liquefied natural gas (LNG) from other regions mean that it is also affected by the European and global price increases.
Without new investment, it will have to import around 80% of its gas by 2030, and around 70% of its oil, up from around 60% and 20% now respectively, the OEUK said.
Green groups have argued ramping up Britain’s oil and gas extraction is at odds with its climate target of reaching net zero emissions by 2050.
“This will do nothing to tackle the cost of living crisis as new licenses take many years to develop,” said Mike Childs, head of science, policy and research at Friends of the Earth.
In an interview with Reuters on Tuesday, the CEO of British oil and gas firm Enquest also urged the incoming government to offer investment incentives to North Sea oil and gas companies.
Increasing oil and gas drilling in the UK North Sea is one of the solutions to tackling the current energy crisis, EnQuest’s Amjad Bseisu said.
($1 = 0.8675 pounds)
(Reuters - Reporting by Bozorgmehr Sharafedin; Editing by Tomasz Janowski)