Oil and gas industry leaders have been encouraged by speculation that Energy Security and Net Zero Secretary Ed Miliband is poised to reverse Labour’s ban on new drilling.
It has been reported that Labour will perform a major u-turn amid warnings from union bosses that net zero risks undermining British industry and any prospects of higher growth.
Mr Miliband has been the Cabinet’s strongest advocate of a ban on new oil and gas licences but pressure is now mounting from the Treasury and within the wider party for a change of position.
The ban is also strongly opposed by the GMB union, which is expected to demand greater support for manufacturers and measures to lower energy prices at the Labour Party conference in Liverpool next week.
Gary Smith, the GMB’s general secretary, has claimed that it is “absolute madness” to restrict investment in the North Sea while increasing dependency on costly imports from abroad, a view advanced by industry group Offshore Energies UK.
David Whitehouse, OEUK’s CEO, tonight said: “We would welcome a pragmatic approach – one that prioritises domestic oil and gas production over imports while supporting the build out of renewables.
“After years of uncertainty, this must be the start of a broader package of reforms, including changes to the Energy Profits Levy, if we are to support skilled jobs, boost the economy, and reduce the UK’s increasing reliance on imports.
“We will need oil and gas for decades to come…support for domestic oil and gas production is essential to better manage our growing dependence on imports and to support UK economic growth, industry and a homegrown energy future.”
A Whitehall source told The Sunday Times that the move was designed to “give the sector a few more years” and “sustain the supply chain for longer, which will be needed for renewables”.
Government lawyers have reportedly been tasked with examining whether Labour can claim to be sticking to its original pledge while allowing for extra exploration to go ahead.
US president Donald Trump also urged Sir Keir Starmer to exploit the UK’s oil and gas during his state visit last week.
Labour has previously insisted that its drilling ban would make little difference because the North Sea is already a mature basin that is in decline.
However, experts have repeatedly warned that Mr Miliband’s policies risk accelerating that decline – depriving the Treasury of tax revenues and making Britain more dependent on foreign imports.
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