The group says the country "urgently" needs to produce its own oil and gas to secure supplies.
8 hours ago
Dearbail Jordan,Senior business reporter and
Daniel Thomas,Senior business reporter
Matthew Lloyd / Bloomberg via Getty Images
The offshore energy industry has warned that the UK "urgently" needs to produce its own oil and gas and called for the government to support North Sea exploration.
Offshore Energies UK (OEUK) said without more domestic production, the country risks becoming reliant on imports "at a time of rising global instability".
Oil and gas prices have spiked since the US-Israel war with Iran began and Tehran effectively shut the Strait of Hormuz, a key route for global crude supplies.
The Labour government has banned new licences for new oil and gas fields in the North Sea and a government spokesperson said issuing exploration permits "cannot give us energy security and will not take a penny off bills".
It added: "Regardless of where it comes from, oil and gas is sold on international markets, which set the price for British billpayers, making us a price taker."
Energy Secretary Ed Miliband recently told the BBC that the lesson from the current crisis - which has seen the oil price rise by more than 30% - is "we need home-grown, clean power that we control".
But OEUK said it was "not an either renewables or oil and gas scenario".
In a report out on Tuesday, it claims oil and gas still supplies around 75% of the UK's energy needs and will meet around a fifth of demand by 2050.
It also said that demand was rapidly increasing as domestic production declined, leaving the public vulnerable to potential price shocks.
"Recent events have shown how quickly energy markets can tighten and how easily cargoes can be diverted away from the UK when other buyers bid higher," said OEUK chief executive David Whitehouse.
"We urgently need greater supplies of secure, domestically produced energy including oil and gas, which will remain a critical part of the UK energy system and economy for decades."
The industry group said it wanted the government to review its approach to offshore oil and gas exploration licences after last year's ban.
Currently, developers can only increase production in areas that are already part of an existing licensed field, or adjacent to them, to ensure they remain viable.
OEUK also wants the Energy Profits Levy (EPL) - otherwise known as the windfall tax - to be scrapped in 2026 which would be four years earlier than planned.
It would be replaced by the so-called Oil and Gas Price Mechanism, which would impose a 35% tax when oil and gas prices breached a certain level. Under the current windfall tax energy companies must pay 78%.
It said this would unlock £50bn of new investment in UK oil and gas.
On Tuesday, the Conservative Party will use its Opposition Day debate in parliament to call for an end to the EPL and the ban on new oil and gas licences.
The written judgement on the Rosebank and Jackdaw fields came after a case brought by environmental campaigners, Uplift and Greenpeace, at the Court of Session in Edinburgh.
The court ruled that the developers had failed to properly assess the likely environmental impact and ordered them to seek fresh approval.
Claire Coutinho, shadow secretary of state for energy security, said: "Turning our backs on domestic gas that could heat millions of homes would be madness in normal times, but it is sheer lunacy in the midst of a gas supply crisis."
But researchers at the University of Oxford have disputed claims the UK could significantly lower its energy bills by extracting more of its own oil and gas.
They found that even if the UK maximised North Sea extraction and returned revenues directly to households, the cost savings would be far smaller than those expected from accelerating the shift to renewable energy.
Mel Evans, head of climate at Greenpeace UK, said: "The [oil and gas] industry does have billions of reasons to want the UK to cut their taxes and license more drilling.
"While it wouldn't take a penny off energy bills or petrol prices, it would maximise the potential oil and gas revenue during an oil war, when prices spike and fossil fuel companies can profiteer more than ever."
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