Oil and gas chiefs warn Labour's energy strategy could leave UK 'uninvestable'

Sir Keir Starmer’s strategy to speed up the green energy transition could leave the UK “uninvestable”, the oil and gas industry has warned.

Oil and gas chiefs have warned that an incoming Labour government’s plans to extend a windfall tax and end new fossil fuels licences could put a £450 billion blueprint at risk and leave Britain as “uninvestable”.

Sir Keir Starmer has suggested he will extend the UK government’s taxation on windfall profits of oil and gas companies and insisted he will halt new North Sea projects being approved as part of his strategy to accelerate the clean energy transition.

The industry body, Offshore Energy UK (OEUK), has published its business and supply chain outlook for the year - suggesting a domestic offshore energy market could grow to £450 billion by 2040.

The OEUK has warned that Labour’s windfall tax and pledge to end new fossil fuels licenses is set to put that investment at risk.

The organisation’s report shows oil and gas projects could create £145 billion for the UK’s supply chain, together with new offshore wind farms around the UK generating £260 billion worth of work, new hydrogen projects tallying up £25 billion and fresh carbon capture and storage (CCS) technology bringing in £34 billion.

With the right conditions, OEUK claims that the UK offshore energy sector could benefit from a global export market worth more than £1 trillion within the next 15 years – generating thousands of new jobs and billions in new revenue for the UK economy.

But warnings have been issued that without stable energy policy and a globally competitive tax regime, the UK will miss out on the lion’s share of the benefits.

OEUK CEO David Whitehouse said: "The UK has a £450 billion domestic energy opportunity that could transform the economy and support jobs - but warning lights are flashing.

“Our report shows a homegrown energy transition can generate a £450 billion domestic opportunity for UK firms by 2040 that could kickstart growth across the UK economy. But investors, firms and workers need stability, predictability and fair returns to build a low carbon future here and keep jobs in the UK.

“We are in a global race for investment, and UK energy companies need supportive long-term policies, a stable tax regime, and responsible rhetoric from all sides.”

Ross Dornan, OEUK’s market intelligence manager, who wrote the report, warned that Labour’s proposals “would really make the UK move towards being uninvestable”.

He added that “UK producers are not seeing windfall conditions”, stressing “that needs to be reflected in tax policy”.

Mr Dornan said: “We want to see a sign above the door that says the UK is open for business. The UK is competing against other countries for that investment. If you stand still or go backwards, we will lose out to those other countries.”

The Scottish Government is still yet to produce its updated energy strategy having delayed the publication. In the draft energy strategy, SNP ministers suggested an “acceleration” of the decline of the oil and gas sector amid the climate crisis in a move which left OEUK “concerned”. The Scottish Government’s energy strategy is expected to be published before the Holyrood summer recess - more than two years late.

Read the latest issue of the OGV Energy magazine HERE