Labor energy policies already impacting North Sea businesses | Business News

If the polls are correct, Labor will be in government in less than a month, but the party’s policies are already having an impact on business.

Three oil and gas companies – Jersey Oil and Gas, Serica Energy and Neo Energy – said on Wednesday they had decided to delay by a year the planned start of oil production at Buchan, an oil field in the North Sea, 190 kilometers away. North East. of Aberdeen, jointly owned.

The trio explicitly linked the decision to the timing of the election earlier than expected.

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Jersey Oil and Gas, speaking on behalf of itself and its joint venture partners, told shareholders: “While activities will continue so that the Buchan project is ready for field development plan approval by the end of this year , the exact moment to achieve this key milestone and enabling the sanction of the project is naturally linked to ensuring fiscal clarity from the next government and ensuring that the project remains financially attractive.”

The Labor Party’s main energy policy

That was a reference Workenergy policies.

Sir Keir Starmerthe Labor leader, confirmed last week that the Labor Party intends to spend £23.7 billion during the next parliament on a “green prosperity plan” at the heart of which is the creation of a state vehicle, Great British Energy, which go invest in renewable energy.

It will be financed mainly by increasing existing extraordinary taxes first tax on North Sea oil and gas producers, Rishi Sunakas chancellor, in 2022.

Sir Keir, who spoke last week of a “proper extraordinary tax“, proposes raising the total tax level from the current 75% to 78%.

Ed Miliband, the shadow secretary of state for energy security and net zero emissions and the architect of the Labor Party’s energy plans, also proposes scrapping the tax benefits that Sunak put in place, along with the windfall tax, which allowed producers to offset their investments in new production against your tax bills.

Industry body Offshore Energies UK suggested that Labour’s plans could result in the loss of 42,000 jobs among North Sea oil and gas producers.

No new licenses scaring oil and gas companies

But what really seems to have spooked Jersey and its partners is the Labor Party’s previous promise that it would not grant new oil and gas licenses in the North Sea.

If this ban goes ahead, it will have a direct impact on developments such as Buchan, which is thought to contain 100 million barrels of oil and is expected to produce its first oil in 2026.

The £900m Buchan project is not the only North Sea investment potentially put at risk by Labor proposals.

Trade publication Energy Voice Online reports today that other projects, including Glendronach, a proposed gas field west of Shetland being developed by major French company TotalEnergies, and Avalon, an oil field in the Outer Moray Firth being developed by Malaysian producer Ping Petroleum, could also be delayed in the same way as Buchan.

It also reports that proposals by London-based Viaro Energy to buy North Sea assets, including the Anning and Somerville gas fields, from Australia’s Hartshead Resources are also facing delays.

Francesco Mazzagatti, founder and chief executive of Viaro, told Energy Voice Online: “The general election and Labor pledges for no new oil and gas licenses are making it very challenging for producers to strategically approach investments in the North Sea.

“With the four changes the Conservatives have made to the EPL (Energy Profits Levy) tax in as many years, and with the plans announced by Labor across the sector, there is a distinct lack of planning and predictability that is needed to deliver projects successfully. and without delays.

“A more sensible approach should have been implemented a long time ago.”

Political and union campaign on the subject

Before the elections the Conservatives and the Scottish National Partywho together currently hold all the seats in the Grampian region, are campaigning hard on the issue.

However, once in power, the issue could quickly become a headache for a new Labor government.

Unite, the UK’s biggest union and a major party funder, is already urging Sir Keir not to ban new licenses for oil and gas exploration until the Labor Party finds ways to offset the job losses that would result from such measure. .

The industry, however, is desperate for a quick decision that will give it clarity.