Boris Johnson looks to increase North Sea oil and gas production


Boris Johnson is preparing to unveil a new UK “energy supply strategy” following Russia’s invasion of Ukraine that could involve more North Sea oil and gas production.

The prime minister insisted he was not dropping the government’s commitment to cut carbon emissions but said the UK needed greater self-sufficiency in its energy sources.

As Britons grapple with a broad-based cost of living crunch, the government’s new energy supply strategy is not expected to provide further immediate relief for households contending with soaring electricity and gas bills.

But with mounting pressure on energy suppliers, government officials said the Treasury was preparing a second bailout package worth hundreds of millions of pounds for Bulb, the electricity and gas provider that went into special administration in November, unless a surprise bidder emerges.

The UK energy market is being roiled by further sharp increases in the cost of oil and gas following Moscow’s full invasion of Ukraine.

Johnson told a press conference on Monday that ministers were considering the option of using more oil and gas from British sources.

“It is completely the right thing to do to move away from dependence on Russian hydrocarbons, but we have to do it step by step,” he said.

“We have got to make sure we have a substitute supply. One of the things we are looking at is the possibility of using more of our own hydrocarbons. . . We need to increase our self-reliance. ”

As well as potentially increasing UK North Sea oil and gas production, Johnson’s strategy is expected to involve more nuclear power and renewable energy.

Kwasi Kwarteng, business secretary, does not see shale gas as part of Britain’s energy mix and is resisting calls from Conservative MPs to end a ban on fracking.

Johnson, who has championed the UK’s commitment to net zero emissions by 2050, said western countries would work together to find alternatives to Russian hydrocarbons.

UK wholesale gas prices followed oil higher on Monday after the US said it was in “active discussions” with European countries about a ban on imports of Russian crude.

UK gas prices hit a fresh record of 800p per therm at one point in a volatile trading session, before falling back to 501p, up 8 per cent on the day. A year ago UK gas prices were trading around 40p per therm.

Brent crude surged to $ 139 a barrel, before falling back to about $ 120. Average petrol prices in the UK have topped £ 1.55 per liter for the first time, according to the RAC motoring group.

Even before Russia’s invasion of Ukraine, energy bills were due to soar after the Ofgem regulator said the price cap for 22mn households would rise 54 per cent in April to almost £ 2,000 a year.

Experts say the price cap could reach between £ 3,000 and £ 3,400 a year in October when it is next due to be adjusted.

Chancellor Rishi Sunak in February announced a £ 9bn package to help households with their energy bills, which included a £ 150 council tax rebate for properties in A to D bands in England.

Sunak in November set aside £ 1.7bn in working capital for Bulb to keep the company operational until April, after Ofgem concluded it could not transfer its customers to rivals.

But with just three weeks to go before that support package expires, industry insiders said the special administrator was unlikely to find a buyer for Bulb, meaning Sunak is expected to have to provide more working capital.

A government spokesperson said the special administrator was obliged to keep the costs of the process “as low as possible”.

Last year the UK met about 40 per cent of its gas demand from domestic production, but analysts said the proportion could rise marginally this year with projects such as the Elgood and Blythe fields in the North Sea due to come on stream.

Climate change campaigners said bringing on new projects takes years and would not quickly relieve the problem of soaring energy bills for households.

It takes three years on average to produce the first gas from a project after a company has received development consent, according to figures from the Oil and Gas Authority, the North Sea regulator.



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