Labor North Sea oil and gas policy under attack from industry and activists | Business News

One of the policy areas that the Labor Party has been very specific about during this general election campaign is its approach to oil and gas production in the North Sea.

The party has made it clear that it will increase existing extraordinary taxes first he slapped North Sea oil and gas producers in 2022 by Rishi Sunakwhen he was chancellor, taking the full level of taxes from the current 75% to 78%.

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Ed Milibandthe shadow secretary of state for energy security and net zero emissions, also proposes to eliminate the tax benefits that Mr Sunak put in place alongside the extraordinary tax, to sweeten the pill, which allowed producers to offset their investments in new production with your tax accounts.

Miliband, who has referred to these tax cuts as “loopholes”, argues that this would bring the tax treatment of the British North Sea in line with that of the Norwegian North Sea. He also proposes a ban on new oil and gas exploration licenses as part of what remains of his ‘green prosperity plan‘.

With Work so far ahead in research, i.e. is already having an effect on investment in the North Sea, with a trio of companies – Jersey Oil and Gas, Serica Energy and Neo Energy – announcing earlier this month that they are delaying by a year the planned start of production at the Buchan oilfield, 190 kilometers northeast of Aberdeen.

Industry attacks

Serica, which has produced an average of 43,781 barrels of oil or oil equivalent per day so far this year, today sought to remind politicians of the potential consequences of their actions.

David Latin, chairman and interim chief executive of Serica, launched a furious attack on the proposals – telling shareholders: “I have been involved in this industry for over 30 years and have worked all over the world.

“Except when I was responsible for a company that had significant assets in a war zone, I have never encountered a situation that was as challenging when it comes to making investment decisions and planning for the future in general, as is the case in the UK today.”

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Reminding his audience that the UK consumes almost twice as much oil and gas as it produces, Mr Latin said the deficit would persist even if the country sought to reduce its hydrocarbon consumption, with the gap filled by imports.

He added: “These imports worsen our national balance of payments, only provide jobs and taxes to foreign countries, and typically have greater carbon emissions in production and transportation when they reach our shores.”

Dealing with Misconceptions

Criticizing the Conservatives for persisting with unexpected taxes, despite oil and gas prices having returned to historically normal levels and Labor for proposing to increase these taxes, Mr. Latin said that there were a series of mistakes surrounding the tax regime – namely the notion that the extraordinary tax is being paid largely by large oil companies such as Shell and PA.

He continued: “As for the claim that the tax is being paid by the ‘oil and gas giants’, it is actually independent companies like Serica that are most affected. The ‘big ones’ only account for about a third of the country’s production. United Kingdom and the vast majority of its profits are made abroad and are not affected by rising tax rates on UK production.

“Indeed, for those companies like Serica that continued to invest in their assets during periods of lower commodity prices prior to the invasion of Ukraine, the current tax regime represents an additional punishment for venture capital committed to their portfolio during the very low raw material prices seen in the COVID period.

“Closing ‘loopholes’ in UK oil and gas tax seems to mean different things to different people.

“Whatever that means, I would like to make it very clear that reducing tax relief for capital expenditure below the rate at which tax is due would make investment in the vast majority of UK North Sea projects unprofitable , which means that these projects, and the jobs and tax revenue they would generate, simply won’t happen.”

Union criticism of Labor

But criticism of labor policy also came today from another direction.

Jointhe UK’s biggest union and traditionally the Labor Party’s biggest financial supporter, also has concerns about banning new oil and gas exploration licenses that could force the UK to import more gas when it still has plenty of gas of its own.

Today it published an open letter calling for a rethink of the ban, signed by almost 200 local businesses from Scottish towns dependent on the oil and gas industry – while some of these companies joined Unite members in a demonstration outside the London Maritime Museum Aberdeen.

Sharon Graham, general secretary of Unite, said: “Until Labor has a concrete plan to replace jobs in the North Sea and ensure energy security, the ban on new oil and gas exploration licenses must not proceed.

“Labour must not allow oil and gas workers to become this generation’s coal miners. Scotland’s oil and gas communities are crying out for a secure future and that is what Labor must deliver.”

However, while businesses warn that Labor’s policy will boost investment elsewhere and unions worry about the impact on jobs and local communities in the north-east of Scotland, there are others who think the party could go further.

Not going far enough

While Unite was holding its demonstration in Aberdeen, around 50 protesters from a group calling itself Stop Polluting Politics were holding one of their own demonstrations, 900 kilometers to the south, at the Labor Party headquarters in Southwark, south-east London.

They allege that the party has “financial ties with polluting companies” and criticized a decision by the Raquel Reevesthe shadow chancellor, to accept a campaign donation of £10,000 from Lord Donoughue, the Labor peer, who once chaired the Global Warming Policy Foundation – a climate change-skeptical lobby group.

They claim that Ms Reeves’ decision to “water down” Mr Miliband’s “green prosperity plan” in February this year was influenced by the donation – something Lord Donoughue himself has vehemently denied.

All of this highlights how energy policy threatens to become a major headache for the Labor Party if it wins the election this week.