Time for PM to be pragmatic on North Sea – Daily Business Magazine

Andy Burnham should press the button on new oil and gas fields, writes TERRY MURDEN

With a pesky north London by-election out of the way and the Green Party leader put firmly in his place, Andy Burnham should once again be turning his attention northwards. This time to the far north of his kingdom where those he needs to help him re-industrialise Britain are awaiting a decision that he cannot afford to delay any longer.

The Prime Minister, who has declared himself a pragmatist, needs to show he means it by approving the Jackdaw and Rosebank fields in the North Sea.

Fears of a backlash from the environmentalists that could have scuppered Labour’s defence of Sir Keir Starmer’s former seat in Holborn & St Pancras were, in any case, overdone. The seat was never likely to be lost over an issue that has little direct bearing on the constituency.

Approving Jackdaw, which is largely a gas field, and Rosebank, more focused on oil, would deliver trigger almost £11 billion in investment – creating thousands of jobs – and provide the Treasury with more than £700m a year in tax revenues. It reduces Britain’s dependency on imports and it would help restore Labour’s standing in the northeast of Scotland.

For the Aberdeenshire economy, the decision cannot come soon enough where jobs being lost in fossil fuel related activity is outstripping those being created in renewables. The case has been made by Offshore Energies UK and others for a dual-fuel approach to energy, with the transition to clean energy operations taking place alongside continued production of oil and gas that the UK will rely on for decades to come.

At its peak, Jackdaw could account for 6% of UK gas supply, displacing “at least 15% of liquefied natural gas imports”, according to the Tony Blair Institute. The current supply regime is contributing to higher prices that are affecting businesses and consumers alike and forcing closures from refineries to restaurants. It is a cycle of decline that needs to be reversed.

Mr Burnham has shown his understanding of the dislocation in the energy market. The over-reliance on the gas market and its impact on electricity prices, spurring his decision to set up GB Grid to build the capacity needed to get green energy to consumers. He needs to go further by not only approving the two North Sea fields but bringing forward the replacement levy that is currently acting as a break on investment.

Jackdaw and Rosebank are owned by Adura, a joint venture between Shell and Norway’s majority state-owned Equinor whose chief executive Anders Opedal this week warned that blocking the two fields would leave the UK no longer “investable”. That is a tag Mr Burnham could do without.

As a football fan, he will may recall a Norwegian commentator taunting the defeated England team with the declaration that “your team took a hell of a beating”. The Prime Minister would not like it to be repeated by investors if they decide the UK is losing its place at the energy table.

Terry Murden is editor of Daily Business and a former Scotland editor and business editor of The Sunday Times, and business editor of The Scotsman

>Latest Daily Business news

Related