UK calls for revival of North Sea oil and natural gas development to reduce Russian imports

The UK government on Thursday unveiled an energy security strategy to reduce its reliance on fossil fuel imports that would revive offshore oil and gas production in the North Sea.

The nation, like others in Europe, is trying to rid itself of Russian oil and natural gas imports. Their strategy calls for more domestically produced natural gas as a transition fuel. The plan also aims to use more wind and solar resources, increase hydrogen production, expand nuclear power and improve energy efficiency.

“…We will make better use of the oil and gas in our own backyard by breathing new life into the North Sea’s energy fields,” said Prime Minister Boris Johnson.

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The North Sea emerged as one of the leading oil-producing regions in the 1970s, but production has since declined, forcing Europe to become more dependent on imports. Around half of Britain’s natural gas needs are currently met from domestic sources.

The UK government is aiming to end imports of Russian oil, which meets about 8% of its needs, by the end of this year. It also aims to reduce Russian gas imports, which account for about 4% of supplies. Europe has outlined a plan to break away from the pariah state before 2030.

Improving energy security

“Obviously governments around the world are very focused on improving their energy security,” Evercore ISI analysts led by James West said on Thursday after the UK unveiled its strategy. “With increasing energy demand, it becomes important to increase energy supply from both fossil fuels and renewable energy.”

Britain’s Department for Business, Energy and Industrial Strategy said on Thursday that Britain’s North Sea sector has about 7.9 billion barrels of oil reserves and 560 billion cubic meters of natural gas.

The government’s strategy to increase production includes another round of offshore licensing this fall. Regulators would also speed up project development while the country remains “open-minded” to onshore reserves. Business and Energy Minister Kwasi Kwarteng recently commissioned a study to review the safety of shale gas extraction, which the UK paused in 2019.

Neptune Energy, which operates in the North Sea’s Cygnus field, said the strategy sends a “clear message to investors that the UK is back open for business”. CEO Pete Jones said the company intends to quickly ramp up production from the North Sea in Norway. He said the company could supply more gas to UK homes if the government changes input specifications that allow higher volumes.

The energy security strategy builds on a 10-point plan to accelerate alternative energy development released in 2020 and a net-zero strategy released last year. The government’s plan to achieve net-zero greenhouse gas emissions by 2050 calls for a significant reduction in reliance on oil and natural gas, without eliminating them entirely.

The government said Thursday it aims to bring eight nuclear reactors online before 2030. The UK expects to have a nuclear power supply of 24 GW by 2050, or three times more than current capacity.

The security plan also envisages doubling UK hydrogen production to 10 GW by 2030. Offshore wind targets now stand at 50GW by 2030, while the government plans to quintuple solar capacity from the current 14GW.

The plan also provides billions of dollars in subsidies to help households get a handle on energy bills and make homes more energy efficient. It would continue to help industries across the country with skyrocketing energy prices.

Make UK, a manufacturing trade group, welcomed the plan, acknowledging it was a necessary strategy to reduce energy import dependency. But CEO Stephen Phipson said more could be done in the short term to control energy costs, such as reducing carbon costs in the UK Emissions Trading Scheme.

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