Four in 10 North Sea oil and gas licences owned by foreign firms and investors

A study by he Common Wealth think tank has revealed that 40% of the licences for North Sea oil and gas are owned by firms based abroad, with profits going to overseas companies and investors

Two-fifths of North Sea licences to drill for gas and oil are owned by foreign firms and investors, a study has revealed.

Analysts at the Common Wealth think tank found 41.3% of licences in the fossil fuel fields were controlled from abroad. They called for wells and platforms to be publicly-owned, meaning profits could be pumped into greener energy.

Experts examined data from the North Sea Transition Authority found 314 licences in operation, consisting of 760 sub-areas. They said 29.7% were held by companies which are or have been backed by private equity firms. Some 41.3% are held by firms located overseas, including 10.8% by enterprises backed by foreign governments such as Abu Dhabi-based Taqa, with 3.9%; Norway’s Equinor with 3.4%; and South Korea’s Dana with 2.1%. British energy giants Shell and BP own 8.09% and 5.35% respectively.

Common Wealth director Mathew Lawrence said: “The future of the North Sea is central to debates about Britain’s energy security. But that focus means we often ignore the present - who owns and profits from oil and gas extraction today. The answer is clear; the North Sea is dominated by three sets of companies - the multinational fossil fuel giants, private equity-backed firms, and overseas companies, many of which are state-owned. Looking forward, the lesson is clear - if we want the wealth of the renewables revolution to benefit the public, rather than leak offshore, we need to ensure the public retains ownership of the country’s shared natural wealth, unlike how it squandered its oil and gas resources.”

The think tank’s data analyst Sophie Flinders said: “The North Sea, part of our natural heritage, should be publicly owned. Instead, over 10% is owned by overseas state-owned enterprises (and) almost 30% is owned by formerly private equity-backed companies. Publicly owned stakes in the North Sea would provide the best route for the clean energy transition, with change managed by the state instead of leaving coordination to different companies each with different agendas.”

Tessa Khan, executive director of Uplift - which campaigns to stop the use of fossil fuels - said the study “makes clear what many have pointed out to this Government time and again - that North Sea oil and gas reserves don’t belong to the UK public but are owned by private companies, whether that’s multinationals, private equity or foreign government-backed firms”. She added: “As a result, there is almost no public benefit in issuing new licences and approving new fields, only private gain.”

Michael Tholen, sustainability and policy director trade body Offshore Energies UK, said that “regardless” of where foreign firms were based, “they all need to satisfy certain UK corporate governance criteria including aspects like corporate structure and hierarchy of decision-making responsibility between the UK affiliate and head-office”.

“Regardless of where companies are headquartered, they bring lots of UK benefit. Their activities in the UK all bring jobs, taxes and energy to the UK, from our UK waters,” he said. Mr Tholen ssid the currency system “works well”, adding: “The wider interests of the UK state are protected by legislation and regulation and this approach has proved highly effective over five decades in the licensing of offshore oil and gas activity and similarly in offshore wind arrays. The oil and gas sector’s contribution to the public purse/Treasury adds up to around £400bn in production taxes in the last 50 years. The sector is a major contributor to the economy , generating almost £30bn in gross value added in 2022.”

Defending profits going to private companies and shareholders, he added: “The offshore oil and gas sector is the most heavily taxed sector of the economy. Companies investing in the UK’s energy future, from multinationals to UK-headquartered firms, are key to the British economy - providing decent jobs, paying taxes in the UK, producing the energy we need and scaling low carbon opportunities that will be key to achieving net-zero.”

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