The Press and Journal (Aberdeen and Aberdeenshire)
Oil and gas bosses urge a sea change in support of UK’s energy security
North Sea oil and gas veteran Les Thomas has called for cross-partypolitical backing for the industry.
This is needed “now more than ever”, he said, adding: “Unfortunately, domestic oil and gas has been leveraged for shortterm political gain, threatening the energy security of the UK and damaging long-term economic growth.”
The comments came alongside annual results from Jersey Oil and Gas, of which he is chairman.
Mr Thomas is a former chief executive at Aberdeen-based Ithaca Energy, among numerous other senior roles in the industry.
“The ownership landscape in the North Sea has dramatically shifted away from ‘Big Oil’ to independents like us and our partners, that are fully invested in UK waters,” he said.
“While it might be headline grabbing to advocate taxing Big Oil to pay for green energy, it is having an adverse effect, making domestic energy less competitive and forcing increased reliance on costly imports.
“Last year the UK spent more on importing hydrocarbons than it spent on the entire defence budget, a direct consequence of short-term fiscal policy damaging long-term investment into homegrown energy.
“While demand for oil and gas remains, domestic energy provides the most effective, lowest carbon option available and provides an economic bridge to the future as new energy infrastructure is created.”
Jersey is a junior partner in one of the largest development projects currently planned in the UK North Sea – the Buchan redevelopment, about 95 miles north-east of Aberdeen.
The Buchan field is estimated to contain gross discovered oil and gas resources of about 70 million barrels of oil equivalent. Operator Neo Energy owns 50%, with Serica Energy and Jersey having stakes of 30% and 20% respectively.
Production there stopped in 2017 due to certification limitations of the infrastructure.
The asset is to be redeveloped using the giant Western Isles floating production storage and offloading (FPSO) vessel.
Work started earlier this month to obtain geophysical and geotechnical data required for contract tendering, as well as to “inform” mooring design for the FPSO being hooked up to an offshore wind farm for power.
Jersey said the overall project was making good progress, with completion of pre-sanction front-end engineering and design work also on track.
A draft field development plan was submitted to the industry regulator last December.
And an environmental statement for the project was sent to officials earlier this year.
Subject to project sanction from the joint venture partners, these submissions pave the way for obtaining the necessary regulatory approvals for the Buchan redevelopment project in the second half of 2024. First oil is expected to flow from 2026.
But Jersey warned the UK oil and gas industry is “currently being frustrated in its efforts to maximise the production of homegrown resources by fiscal uncertainty”.
Jersey chief executive Andrew Benitz added: “Together with our joint venture partners and support from our shareholders, we have delivered an investment opportunity that is expected to support over 1,000 jobs across many parts of the UK supply chain, provide private investment of around £900 million into the UK economy and generate hundreds of millions in forecast UK tax receipts.
“Multiple recent fiscal hikes, compounded by potentially further fiscal uncertainty associated with the forthcoming election, are weighing heavily on the UK oil and gas industry.
“With hydrocarbon imports into the UK at a record high last year, the spotlight will inevitably refocus on domestic supply from the North Sea.”
And continuing his call for political parties of all hues to get behind the North Sea industry, Mr Thomas said: “Projects like this unleash the UK’s potential to power our future. This is the message we are communicating to our politicians.”
Jersey posted pre-tax losses of £5.6m for 2023. This followed losses of £3.1m in 2022.