The Government must commit to boosting flagging domestic energy production to protect consumers from future supply shocks, argued one of the UK’s leading industry bodies.
Offshore Energies UK (OEUK) has called on Downing Street to back North Sea oil and gas exploration, to help drive down prices and reduce Russia’s influence on the country’s supply security.
It warned that global efforts to remove Russia’s oil and gas will cause supply and price implications for years to come, and that the UK was increasingly dependent on overseas vendors to meet its energy needs.
The body noted that production of oil and gas in UK waters has declined over the past decade, with the industry now meeting just half of domestic gas consumption and 80 percent of its oil requirements.
OEUK argues that this makes a long-term energy strategy which recognises 85 per cent of British households rely on gas for heating is essential.
The group’s energy policy manager Will Webster highlighted that alongside gas production, energy producers were developing renewable and low carbon projects such as offshore wind, hydrogen and carbon capture, which are essential to meeting the UK’s energy needs in the future.
He said: “We are seeing the reality of how complicated the transition to a lower carbon energy future will be, with a clear need to manage supply and demand as a whole and not in isolation.”
The OEUK’s latest push to ramp up domestic energy generation in the North Sea follows calls from the Labour Party to remove investment relief from the windfall tax to tame rising household bills.
OEUK has pushed back against this consistently, highlighting the need to incentivise development projects.
It has also written to both Tory leadership contenders, Liz Truss and Rishi Sunak, with seven key asks to encourage the private investment needed to safeguard the UK’s supplies of energy, and to deliver climate goals.
This includes meeting with the sector before the expected emergency budget this year, removing the Energy Profits Levy as soon as possible, and re-committing to the North Sea Transition deal.
Such urgency follows the latest gloomy forecasts for the price cap this winter.
Multiple forecasters have predicted energy bills will rise as high as £4,000 per year this winter, when energy demand will be at its peak in the coldest months of the year.
In October, Cornwall Insight has forecast the cap will climb to £3,582 per year, an 81 per cent hike from the current price cap level.
Current average energy bills, set at £1,971 per year, are already at a record high.