Offshore Europe 2023: OEUK urges greater government support for UK’s energy planners

Offshore staff

ABERDEEN, UK — Offshore Energies UK (OEUK) has called for measures to unlock £100 billion ($125.6 billion) of private sector investment to allow the supply chain to develop new projects to safeguard the UK’s energy security.

Its 2023 Economic Report estimates that total UK offshore energy investments could reach £200 billion ($251.2 billion) this decade in oil and gas, offshore wind, carbon capture and storage, and low carbon hydrogen.

OEUK members are helping develop 13 GW of the planned new offshore wind pipeline capacity by 2030, projects that cumulatively require almost £30 billion ($37.67 billion) of private investment. Member companies are also developing the UK's first carbon capture and hydrogen cluster projects, with a potential outlay of up to £20 billion ($25.12 billion)

As for potential oil and gas capital investments in the sector, split between projects covering existing fields and greenfield developments, about £100 billion is waiting on final investment decisions (FIDs) from businesses that need renewed certainty to approve, the report stated.

For these investments to go through, there needs to be concerted policy support, a stable and globally competitive tax regime and improved planning and regulatory timelines.

OEUK is calling on all the UK’s political parties to take a pragmatic policy in energy ahead of Britain’s next general election with the Energy Bill returning to the House of Commons for debate this week.

'Shift to a lower carbon world'

Last year’s Energy Profits Levy on UK oil and gas production is stifling some investments. According to a speech by OEUK CEO David Whitehouse at Offshore Europe this week, over the first six months of this year, 13% less crude oil was extracted from the UK North Sea and the mainland; and with so much investment on hold, production volumes are as low as they have ever been.

“When there is a cost-of-living crisis hitting people across the country, it is right that all sectors play their part. But when the extraordinary conditions have gone, the windfall tax must go,” Whitehouse said. “I have heard some who say, we need to stop the investment in oil and gas, so that the supply chain can focus on renewables…The truth is the bulk of companies investing in opportunities like floating offshore wind, hydrogen, carbon capture and storage, and decarbonizing our economy will require the cashflow from a stable and predictable oil and gas business to fund these opportunities.

“Fundamentally, we need supportive and stable policy... It is essential that we create a competitive fiscal environment across the entire energy landscape that encourages investment and allows a fair return.

Project developers and supply chain companies need assurances, he added, that could be provided through streamlining and alignment of regulatory consenting and project approval processes.

“Parliaments may thrive on opposition and argument, but we know big engineering projects only succeed through collaboration. The transition to net zero will be the biggest engineering project this country has ever seen. We need consensus to support the very industries and workers whose skills are vital for building our energy future…

“As we look to successfully manage the shift to a lower carbon world, there is no simple choice between oil and gas and renewables, we need both as we cut emissions and decarbonize the economy. Many of the companies investing in opportunities like carbon capture, hydrogen and offshore wind will require the cashflow from a stable and predictable oil and gas business to fund these opportunities.”

09.06.2023