An oil rig anchored in the Cromarty Firth, Invergordon
(Picture: PA)Oil and gas companies have been told to spend their record profits on going green, as the Government says environmental targets will not be abandoned for the sake of energy security.
The head of the UK’s Oil and Gas Authority, which today rebranded as the North Sea Transition Authority, said the agency was “holding North Sea operators to account on emissions” even as the Government encourages more investment in domestic fossil fuel production.
Dr Andy Samuel said: “Our teams are using proactive stewardship, benchmarking and guidance to make sure industry not only meets but surpasses its pledge to halve emissions by 2030, as agreed in the North Sea Transition Deal.
“Businesses have made record profits from high oil and gas prices and we want them to honour the deal now by putting a large chunk towards substantial energy transition projects.”
Energy companies have made huge profits thanks to soaring oil and gas prices over the last year. BP has said its business is like a “cash machine” at current prices and Saudi Aramco, the Saudi state oil company, this week revealed that profits more than doubled last year to hit £83 billion.
Labour has called for a windfall tax on the industry to help ease the cost of living crisis.
Many companies have responded to surging profits with huge payouts to investors. Last month Shell announced plans to return £6 billion to shareholders.
Most have not increased investment in a meaningful way, according to stockbroker AJ Bell.
“A big lift in spend is planned for 2022 but none of the seven majors have increased their budgets in any great way and, in dollar terms, total investment this year is currently set to come in at less than half of 2013’s peak,” said Russ Mould, investment director at AJ Bell.
Oil and gas prices have rocketed due to a supply crunch and surging demand. Russian oil has been shunned by the market in response to Moscow’s invasion of Ukraine, leading to a shortfall in global supply.
The price of Brent Crude climbed again today to reach $111.69 after reports that the EU is considering joining a US embargo on Russian oil imports and following an attack on a Saudi oil refinery over the weekend, which stoked supply fears.
The crunch has led to renewed focus on Britain’s energy supply, with the government set to publish an Energy Security Strategy later this month.
North Sea production will form a key part of the plan. Exchequer Secretary Helen Whately will this week meet with banks and financiers that fund North Sea projects to encourage them to pump money into the area.
Samuel said oil and gas would be needed “for decades” and said investment in new UK fields was “vital”.
But he said emission goals and energy security were “not mutually exclusive,” urging companies not to put transition goals on the backburner.
“They can and must co-exist if we are to achieve an orderly energy transition that delivers broader economic benefits, including jobs and future exchequer revenues, and avoid lurching from crisis to crisis,” he said.
Samuel’s agency was set up in 2015 to secure the maximum value from Britain’s North Sea fossil fuel reserves as the world pivots away from polluting fuels.
