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Traders Place Bets On $250 Oil

North Sea Operator Warns Government Policy Could Starve UK Of Energy

The current windfall tax and the pledge from the Labour Party – tipped to win the next election in the UK – to stop new oil and gas licensing in the North Sea could starve Britain of energy supply, a senior executive at a major UK operator says.

“By a new government imagining they'll be able to stop licences and oil development in the UK, ultimately what that means is that they'll be starving the UK of energy, and it will become very dependent on energy from abroad,” Gilad Myerson, executive chairman of Ithaca Energy, told the BBC.

The windfall tax of 35%, which takes the industry’s overall tax rate to 75%, the highest of any UK sector, and the Labour plans to stop issuing new licenses are spooking operators and investors in North Sea oil and gas, Myerson said.

A slump in investment would ultimately make the UK more dependent on foreign hydrocarbon resources, the executive of one of the largest UK-focused firms told the BBC.

“Politicians keep making statements which spook investors,” he said.

“They are saying they do want hydrocarbons, then they say that they don't want hydrocarbons.”

Labour leader Keir Starmer has said that if Labour is voted in power next year, it would stop issuing new licenses for North Sea oil and gas, but will respect the consents and licenses given by previous governments.

The uncertainty about what Labour would do should it take power next year has threatened the approval of Equinor’s major Rosebank oil project.

If licenses and projects are approved by the current Tory government, Labour would not overturn them if it is voted into office, Starmer said last week.

David Whitehouse, chief executive of industry body Offshore Energies UK, said, “Labour’s proposed ban on new exploration licences is too much too soon. It would be damaging for the industry, for consumers and for the UK’s net zero ambitions.”

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The industry is already responding to the uncertain regulatory environment. Apache, Harbour Energy, Shell, and TotalEnergies have announced either scaling back on investments and drilling, or intentions to review those.  

By Tsvetana Paraskova for Oilprice.com

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