Concern for North Sea investment as energy imports double

Gas imports have risen from £19.6bn to £49bn while the cost of buying in crude oil from overseas has risen from £17.6bn to £32.3bn.

Trade with Norway, which is the UK's biggest fuels customer has trebled since before the pandemic in 2019 - rising from £8.815bn to £40.838bn in 2022, according to official data seen by the Herald.

And the Offshore Energies UK trade association says the imports will soar even higher as a mix of windfall taxes and "political uncertainty" drives away billions of pounds of investments from the North Sea.

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The trade association says the North Sea could power the UK to net zero and beyond, but over 90% of offshore firms are instead cutting investment.

They say roughly a year's supply from the North Sea the equivalent of half a billion barrels of oil, is either being removed or less likely to be produced because of the challenges. That is enough to support the nation for six months.

And they are warning that the country is exporting the problem of carbon emissions, by relying on buying in energy while scaling back domestically.

An OEUK source said there was a concern that increasing imports were a sign of the emissions export.

"We are in an environment where the Scottish Government are talking of halting gas and oil in UK waters but the problem is the country is highly reliant, still, on oil and gas," said the source.

"We have to get rid of the infrastructure but while we do, we should use our own resources, rather than spending abroad. That supports industry in other countries. While there is a demand, that demand should support industry and jobs in this country."

OEUK cite a mix of high taxes, political uncertainty and inflation as key factors in their decisions to scale back on investment.

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It comes in the wake of windfall taxes imposed on North Sea oil and gas operators, under which their overall tax rate has risen from 40% to 75% in 10 months.

Offshore wind operators face a similar windfall tax, rated at 45%. Both taxes are expected to remain in place till 2028 – even if prices drop.

According to the latest OEUK business outlook analysis, the UK's overall reliance on oil and gas has actually increased.

The UK got 73% of its total energy from oil and gas in 2020. That rose to 75% in 2021 and 76% last year.

Meanwhile since 2018 gas production fell by 7% and oil by 26%, due to what the industry describes as falling investment and regulatory delays.

Those declines would, it says, have been much steeper without earlier investment in new fields – which they say are now crucial to UK energy supplies.

And they warn that a continued lack of investment “could lead to overall production falling by as much as 15% a year by 2030, so output in 10 years will be 80% less than now."

The OEUK analysis says that oil and gas still provide more than three quarters of the UK's energy, supporting 215,000 jobs but that production here provides over half of those needs.

They say that a lack of political support is "undermining the industry" and that companies "need to be give the confidence to invest or imports will soar".

"The industry's potential is slipping away as a direct result of the challenges and urgent intervention is needed," they said.

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David Whitehouse, OEUK’s chief executive, said the levies risk turning the North Sea, "which should be the bedrock of the UK’s energy security, into an unattractive place to invest".

"Some projects will proceed but not the number we need for our energy security and jobs," he said.

"There is every reason to believe our offshore energy sector will remain a bedrock of our economy and society for decades to come. We have the skills, infrastructure and geology.

"We have companies who are already in action and ready to invest more.

"But to make this happen, we need enduring and serious political support, which is reflective of the challenges we face. That support must recognise the reality that there is no simple choice between renewables on one hand and oil and gas on the other."

It is estimated that production emissions in the UK had fallen by 20% since 2018.

The latest data shows that Scotland's carbon footprint has risen from its lowest point in 2017 - despite national efforts to cut greenhouse gases to meet tough climate change targets.

Official analysis shows that the total amount of greenhouse gases, including carbon dioxide and methane that are generated by the public's actions has dropped by nearly a quarter in the 21 years since 1998.

Between 2017 and 2019 - there has been a near 5% rise in our carbon footprint from million 72.4 million tonnes carbon dioxide equivalent (MtCO2e) in 1998 to 75.9 MtCO2e in 2019 - the most recent year for which data was available.

The rise was attributed to emissions embodied in goods and services from other countries and directly used by Scottish consumers which has risen from 25.8 to 31.0 MtCO2e.

Friends of the Earth Scotland are concerned about the rise saying that imports are excluded from Scotland's stringent national climate targets.

Scotland has set a target of zero greenhouse gas emissions by 2045, with interim targets of 75% by 2030 and 90% by 2040. Net zero means the amount of greenhouse gas emissions we put into the atmosphere and the amount we are able to take out will add up to zero.