UK oil and gas producers call for more investment to ease energy crunch

By Bozorgmehr Sharafedin

LONDON (Reuters) – Britain’s oil and gasoline business physique referred to as for brand new drilling licenses within the North Sea and fast funding within the sector to mitigate the affect of excessive costs on customers because the nation grapples with the worst power disaster in many years.

The incoming UK Prime Minister Liz Truss has vowed to behave instantly to assist folks deal with surging power payments that threaten to depart many unable to warmth their properties this winter and stated throughout her marketing campaign she would search to extract extra oil and gasoline from the North Sea.

The benchmark European gasoline worth has quadrupled within the final yr on account of a battle in Ukraine, sanctions on Russia and the aftermath of the coronavirus pandemic.

Offshore Energies UK (OEUK), an business physique for offshore oil, gasoline, hydrogen and wind producers, warned that Britain may face potential power shortages this winter whereas world costs may stay excessive for no less than three years.

“One of the simplest ways for the UK to make sure safe gasoline and oil provides is by elevated funding in its personal sources,” stated Ross Dornan, OEUK’s market intelligence supervisor.

Gasoline manufacturing in the UK rose 26% within the first half of 2022 in comparison with the identical interval final yr, buoyed by new tasks off England’s east coast.

OEUK stated in a report printed on Wednesday that the rise may very well be “short-lived” with out a surge in funding. The commercial physique sees a possible for 26 billion pound ($30 billion)capital funding in oil and gasoline sector by 2030.

Britain isn’t immediately reliant on Russian gasoline imports, however its connectivity to the European nations by means of pipelines and its imports of liquefied pure gasoline (LNG) from different areas imply that it’s also affected by the European and world worth will increase.

With out new funding, it should import round 80% of its gasoline by 2030, and round 70% of its oil, up from round 60% and 20% now respectively, the OEUK stated.

Inexperienced teams have argued ramping up Britain’s oil and gasoline extraction is at odds with its local weather goal of reaching internet zero emissions by 2050.

“This can do nothing to deal with the price of residing disaster as new licenses take a few years to develop,” stated Mike Childs, head of science, coverage and analysis at Associates of the Earth.

In an interview with Reuters on Tuesday, the CEO‮ ‬of British oil and gasoline agency Enquest additionally urged the incoming authorities to supply funding incentives to North Sea oil and gasoline firms.

Rising oil and gasoline drilling within the UK North Sea is without doubt one of the options to tackling the present power disaster, EnQuest’s Amjad Bseisu stated.

($1 = 0.8675 kilos)

(Reporting by Bozorgmehr Sharafedin; Enhancing by Tomasz Janowski)