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January 10, 2024

Non-profit disputes claim new North Sea licences will enhance UK fuel security

A North Sea oil platform. The UK has granted new oil and gas licences for drilling in its waters, but has admitted 80 per cent of production will be sold abroad. (Photo: Carina Johansen/Bloomberg)
A North Sea oil platform. The UK has granted new oil and gas licences for drilling in its waters, but has admitted 80 per cent of production will be sold abroad. (Photo: Carina Johansen/Bloomberg)

Analysis from the UK-based Energy and Climate Intelligence Unit finds that oil from new licences will account for less than 1 per cent of the fuels used in the UK in 2030

Oil drilled under new licences in the North Sea and sent to UK refineries will account for less than 1 per cent of UK fuel use in 2030, according to calculations by environmental non-profit the Energy and Climate Intelligence Unit. 

The analysis from the ECIU casts doubt on the UK government’s claim that granting new oil and gas licences in the North Sea would “bolster the UK’s energy security” and “reduce dependence on imports from overseas”. The government recently admitted that 80 per cent of oil from new fields such as Rosebank will be traded internationally and therefore not contribute to domestic supply.

Using North Sea Transition Authority forecasts, the ECIU calculated that, if UK demand for fuels does not fall and if import and export shares remain as in 2022, then by 2030 production from both new and existing UK oil fields via UK refineries would be the source of one in every 24 litres of petrol, one in every 31 litres of road diesel and one in every 60 litres of aviation fuel used by British consumers.

The ECIU said that, even if UK oil production were expanded to the maximum level in NSTA projections, fuel from UK oil fields via UK refineries would only account for one in every 20 litres of petrol, one in every 26 litres of road diesel and one in every 50 litres of aviation fuel. “So, new licences for drilling in UK waters would increase by less than 1 per cent the amount of each fuel (such as petrol) used in the UK in 2030 that would come from UK oil fields via UK refineries,” it concluded.

“The reality is [that] very little of the oil pumped from the North Sea is refined and sold on British soil, and even then the price is largely dictated by international markets. The notion that more drilling on the continental shelf boosts our energy security doesn’t stand up to scrutiny,” said Gavin Bridge, geography professor and fellow of the Durham Energy Institute at Durham University, who conducted the ECIU study.

UK prime minister Rishi Sunak is facing a potential rebellion from Conservative MPs over the Offshore Petroleum Licensing Bill which, if passed, would allow oil and gas companies to bid for new licences to drill for oil on an annual basis. MPs were due to vote on the bill on January 8, but following delays it will be rescheduled in the next two weeks. A spokesperson from the UK Department for Energy Security and Net Zero told Sustainable Views that “with energy markets becoming more unstable, it makes sense to make the most of our own homegrown advantages in the North Sea.

“These new licences will not make us a net exporter or increase carbon emissions above our legally binding carbon budgets.”

Chris Skidmore resigned as a Conservative MP on January 8, saying in a letter it was “in protest at the government’s decision to prioritise and politicise new oil and gas licences”. In January last year, Skidmore submitted to parliament the independent Mission Zero report, which called for stronger action on achieving net zero.

ECIU head of analysis Simon Cran-McGreehin said: “Much more could be done to boost the UK’s energy independence by properly backing British renewables and helping people insulate their homes to cut energy waste.

“With everyone in agreement that the North Sea will inevitably continue to decline, unless efforts are upped, the UK’s energy independence is being put further in jeopardy.”

A service from the Financial Times