Kwasi Kwarteng, Secretary of State for Business, Energy, and Industrial Strategy, revealed that another licensing round for North Sea projects will be launched later this year.
More oil and gas projects in the North Sea will be launched by the UK in an effort to reduce the country’s reliance on Russian fossil resources, and aim to keep Energy Bills more cost effective.
Yesterday, Mr Kwarteng announced: “As the Prime Minister and I set out in the Energy Security Strategy, domestic production is now more important than ever, recognizing that there will be an ongoing demand for oil and gas over the coming decades as we smooth the transition to cheap, clean, home-grown energy.
Mr. Kwarteng has written to and urged energy firms to develop a strategy for reinvesting earnings from new projects and doubling down on investments in the clean energy transition, as well as accelerating and maximising local oil and gas output.
He said: “In return for the UK Government‘s ongoing support for the sector, the Prime Minister, the Chancellor and I want to see a very clear plan from the oil and gas industry to reinvest profits in the North Sea and, importantly, in the clean energy technologies of the future.”
This comes as BP and Shell are set to post record profits next week as a result of sky-high energy prices, fueling new calls for a windfall tax to assist hard-pressed people coping with record heating and electricity costs.
In an interview with Mumsnet last week, Chancellor Rishi Sunak did not rule out the prospect of a windfall tax in the future.
When asked if he supported a windfall tax on oil and gas earnings, Business Secretary Greg Clark told the BBC: “I don’t know.”
This of course has not been received well by all, with Labour criticizing the move saying the letter that Mr Kwarteng wrote to Energy Firms was “not worth the paper it is written on” for the millions of people facing rising costs.
How would the North Sea projects impact Bills?
A spike in wholesale gas prices at the beginning of last winter led to the demise of 30 energy suppliers, impacting around 4.5 million consumers and caused bills to rocket, expecting to rise even more in the Autumn.
Despite the fact that the cost-of-living problem is still affecting Britons, the Government has not allocated any more funds to help families.
The Government has promoted the North Sea projects as a way to deliver cheaper energy bills to customer, however this has been disputed by many.
#StopCambo, a campaign made up of individuals, grassroots groups and organizations across Scotland have argued that the price of North Sea oil and gas is determined by variations in global gas demand and is unaffected by any comparably slight increase in output.
Even the Business Secretary has stated that “more UK output will have no substantial effect on the wholesale market price of gas,” which has quadrupled in recent months.
The campaign also argued that It takes on average 28 years to go from discovering a new field to extracting any oil or gas, according to official figures. If the government were to license a new gas field today, it would likely be 2050 before it produced anything we could use.
This would clearly not be beneficial for the near future with Britons facing mammoth Energy Bill rises, with a further rise expected in Autumn.
How long will Bills rise for?
Looking at a report from Cornwall Insight, who provides energy market intelligence and analysis, they predicted that in the short term (over the next year) we will see another £600 increase in cap for Winter 2022, meaning that in the past year alone energy prices would’ve doubled, bringing the overall default tarrif price cap to over £2,500.
Looking further into the future, Cornwall insights have predicted Energy prices to remain ‘significantly above average’ up to 2030 even, citing potential delay in new nuclear power and closures of existing plants.