UK Industry Body Congratulates Labour Party Leader

Industry body Offshore Energies UK (OEUK) congratulated Labour Party leader Keir Starmer on the UK General Election result in a release sent to Rigzone by the OEUK team.

In the release, OEUK highlighted that it is “committed to working with the new government on the next steps to a homegrown energy transition, to safeguard energy security, jobs and skills and create an irresistible investment environment here in the UK”.

The organization also warned in the release, however, that “many of the industry’s skilled people and investors remain deeply concerned about Labour proposals for a further windfall tax on homegrown oil and gas production and to end new oil and gas licenses in UK waters”.

OEUK pointed out in the release that “such measures would not create the investment conditions the UK needs to deliver the homegrown energy transition needed to kickstart economic growth”.

The UK offshore energy industry is set to invest GBP 200 billion ($256.3 billion) over the next decade in domestic energy projects, OEUK noted in the release. The industry body stated in the publication that “the jobs and secure homegrown energy offered by the UK’s unique mix of oil and gas, wind, hydrogen and carbon capture technologies offer an exciting future” but added that “the industry needs renewed confidence in order to invest”.

More than 200,000 jobs across the country are currently supported by domestic oil and gas production, wind, hydrogen, and carbon capture technologies, OEUK said in the release.

“Homegrown offshore energy is a jewel in the UK’s industrial crown that government must treasure,” OEUK Chief Executive David Whitehouse stated in the release.

“The Labour party has put economic growth at the heart of its plans, and our offshore energy sector can deliver just that. UK offshore energy companies could invest GBP 200 billion in homegrown energy production this decade alone in carbon storage, hydrogen, and wind opportunities alongside the homegrown oil and gas we all need,” he added.

“The people in our sector and investors remain deeply concerned over Labour proposals to impose a further windfall tax and end new licenses. These policies, if poorly managed, and without industry input will threaten jobs and undermine the decarbonization of the UK economy. The details matter,” he continued.

Whitehouse noted in the release that “Labour leadership has recognized that North Sea oil and gas will be with us for decades to come and committed to managing this strategic national asset in a way that does not jeopardize jobs”.

“The transition is estimated to cost GBP 1.4 trillion ($1.7 trillion), the lion’s share of which will need to come from the private sector. Working together, we need to create the conditions to unlock this investment,” he added.

“We need the new Labour government to follow through on assurances to work in partnership with the sector, listen to our skilled people, and ensure no one is left behind in the UK’s energy transition,” Whitehouse went on to state.

Rigzone has asked the Labour Party for comment on OEUK’s release. At the time of writing, the party has not yet responded to Rigzone’s request.

The UK General Election took place on July 4. With all 650 seats declared, Labour won 411 seats, the UK Parliament website showed, highlighting that this was up 209 on Labour’s total from the previous UK election in 2019.

In a sector comment sent to Rigzone by the Moody’s team last month, analysts at Moody’s Ratings outlined that the Labour Party’s plans would be “credit negative” for North Sea oil and gas producers. Rigzone previously asked the Labour Party for comment on the Moody’s note. The party did not respond.

During a recent event in Scotland, Starmer told attendees that his party is not turning off the oil and gas taps.

“I’ve been very, very clear when it comes to the transition, that we’re not turning off the taps,” Starmer said at the conference, which was streamed by the Scottish Labour Party.

“Oil and gas will be part of the mix for many years, we’re not revoking any licenses, but a transition is coming,” he added.

“Everybody knows the transition is coming. Everybody’s working towards that transition, the investment is already beginning in that transition. Thought is being given about … carbon capture and how the same skills and pipelines could be used,” Starmer continued.

UK Offshore Energy Has Much to Offer

In a message to members late Wednesday, prior to the election, OEUK’s Whitehouse said the UK offshore energy industry has much to offer the next party of government but currently stands with the most to lose.

“Apprehension about the future of oil and gas, wind, and the offshore energy sector overall in the UK is already disrupting investment,” Whitehouse said in the message, which was also sent to Rigzone by the OEUK team.

“Recent months and weeks have shown the extent of concerns, with companies, trade unions and former politicians speaking out in favor of a pragmatic approach. To calm the waters and deliver economic growth, whichever party forms the next government must come good on promises to engage and listen to our concerns on the fiscal regime and oil and gas licenses,” he added.

“Every political party has put economic credibility and growth at the heart of its election strategy. For whichever party becomes the next government, the choices - and consequences of those choices – are clear,” he continued.

“We can make the most of UK companies, infrastructure, and people to drive a homegrown energy transition or take a path that increasingly relies on others. To grow the economy and reach net zero in a way that leaves no one behind, OEUK has pressed all parties to choose a homegrown energy transition,” Whitehouse went on to state.

In the message, Whitehouse said the decarbonization of the UK economy “can be one of the greatest opportunities of our time, with the potential to create wealth across every community in the UK if we get this right”. He warned, however, that “mismanaged policy and lack of confidence risks undermining this”.

“Today UK offshore energy companies support 200,000 jobs,” Whitehouse said in the message.

“Many of those working directly for producers and the wider supply chain are highly skilled. These people are mobile talent, and we need to keep them here or risk losing them to other countries, slowing down our transition at the benefit of others,” he added.

“We have the future offshore energy industry right here on our doorsteps. From Newcastle to Cardiff to Aberdeen, these people deserve to be part of decisions impacting this industry,” he continued.

“The UK’s national debt currently stands at 100 percent of annual national income, the highest levels seen in sixty years. The UK spent a net GBP 42 billion ($53.62 billion) importing oil and gas last year. We need policies that attract private investment, and not deter it,” he noted.

“The only way the next government can grow the economy and not just manage the economy is through partnership with the very industries based here and committed to delivering net zero,” he went on to state.

A thriving economy is the bedrock for a homegrown energy transition, Whitehouse stated in the message.

“Fiscal certainty, competitive returns, and long-term commitments by policy makers across the energy landscape will be key,” he said.

“Any future government must look again at overly regulated markets and punitive tax regimes that restrict this,” he added.

Decisions made by politicians in the coming weeks will be felt for decades to come, Whitehouse warned in the message, noting that “they will shape the future of our economy and energy security”.

“These decisions must be done in partnership with people, communities, and sectors involved and not done to them,” he said.

“This industry can grow the economy, support jobs, cut emissions and realize a homegrown energy transition. The opportunities are inspiring, and we need industry to feel optimistic about its potential,” he added.

“That optimism can only begin by seeing the next government turn words into pragmatic and supportive,” Whitehouse went on to state.

Rigzone has asked the Conservative party, the Labour party, Reform UK, the Liberal Democrats, the Green Party, the Scottish National Party, and Plaid Cymru for comment on Whitehouse’s message. At the time of writing, none of the parties have responded to Rigzone yet.

OEUK represents more than 400 companies of all sizes producing oil, gas, wind and hydrogen energy, as well as carbon capture technologies and the energy supply chain, the organization notes on its site.

To contact the author, email andreas.exarheas@rigzone.com