Surging wholesale prices have paved the way to bonanza profits for oil and gas companies, but in the debate over secure, affordable and green energy for the future, there are few clean answers.

Neivan Boroujerdi, upstream research director at the Wood Mackenzie energy consultancy, argues that the recent wave of mergers and acquisitions in the North Sea is not evidence of wider industry confidence in the UK continental shelf. Rather, he says companies are snapping up assets for reasons specific to their own circumstances.

Mr Boroujerdi and others warn that the windfall levy imposed by the UK on “extraordinary” profits during the energy crisis is making it much harder for firms to justify investment going forward, even with generous tax breaks on new capital expenditure. Heavyweights such as TotalEnergies and Harbour Energy have recently announced cuts in drilling activity, and in the case of Harbour about 350 job losses.

Yet at the same time there’s no denying the financial boom manifest most recently by profits revealed today by Hurricane Energy.

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In what it described as a “very challenging and highly successful” year, Hurricane enjoyed a 10-fold rise in underlying pre-tax profits for 2022 even though extraction from its sole asset – the Lancaster field located approximately 60 miles to the west of Shetland – fell from 3,748 thousand barrels (Mbbl) in 2021 to 3,089 Mbbl.

Chief executive Antony Maris said the importance of domestic energy security has come to the fore as the Russian invasion of Ukraine exacerbated the post-pandemic surge in commodity prices: “The resulting high oil price early in the year, combined with outstanding operational performance at the company’s Lancaster field, significantly strengthened Hurricane’s finances.”

Hurricane is also among those caught up in the burst of M&A activity, having agreed earlier this year to a takeover by Prax Exploration & Production.

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The UK remains heavily reliant on fossil fuels, with oil and gas meeting roughly three-quarters of total demand. About 24 million homes depend on gas boilers for heat and hot water, while 32 million vehicles rely on petrol or diesel for fuel.

With some predicting that North Sea production could effectively come to an end in as little as 20 years, the current frenzy of profits and acquisitions could prove a last hurrah for oil and gas in the basin. There is both an environmental and economic imperative to reduce the UK’s reliance on fossil fuels that requires huge investment in network infrastructure and the energy efficiency of homes and factories.

This is where the UK’s energy windfall tax should come into play, with proceeds from the profits levy earmarked specifically for the upgrades needed for a successful net-zero transition. According to the Office for Budget Responsibility, government oil and gas receipts will reach £11 billion in 2022-23, compared to just £300 million two years earlier.

The discovery of what turned out to be massive oil and gas reserves in the North Sea in the 1970s was unfortunately not accompanied by the foresight that led others such as Norway to establish a sovereign wealth fund that is now the envy of governments the world over. This is an opportunity for the UK to at least partially rectify past mistakes.