Concern over North Sea plan as Norwegian oil and gas imports top £40bn

They warn the consequence of the policy could result in continuing to spend substantial amounts of money supporting the sector in Norway and in other countries, while advocating ending the domestic industry.

On Tuesday the Scottish Government published its new draft energy strategy which raises the possibility of having a "presumption against new exploration" while ramping up renewables in a bid to meet climate change targets.

Ministers say they want to pursue a "responsible" approach both in terms of the environment and the economy arguing that North Sea reserves are declining and plans must be made for workers to retrain in alternative green energy production.

However, industry experts insist there are still substantial reserves in the North Sea which could be exploited with investment for another three decades.

They also point out that Scotland and the rest of the UK is heavily reliant on oil and gas with both fuels supplying 75 per cent of the UK’s total energy in 2021.

Industry body Offshore Energies UK (OEUK) last year warned reliance on oil and gas would continue and unless substantial investment was made in domestic exploration and production, the UK would be forced to import almost all of its supplies.

The £40 billion cost to the UK of imported oil and gas from Norway is from monthly statistics on import costs to November published by the Office for National Statistics. The figure for the whole of 2022 is due to be published in February.

Norway set up a sovereign wealth fund in the 1990s which invests the state's revenues from oil and gas production and holds stakes in more than 9,300 companies globally. It is now worth $1.15 trillion.

"Without new investment, by 2030 around 80 per cent of UK gas supplies and more than 70 per cent of oil will have to be sourced abroad", according the 2022 Business Outlook report from OEUK.

The report found that, although there are about 15 billion barrels of oil in the UK continental shelf, there had been too little investment in the platforms, pipelines and other infrastructure needed to access it.

“Norway has been a strong and reliable partner, supplying us with the gas and oil needed to keep our lights on, our homes warm and our traffic moving," said Ross Dornan, OEUK’s market intelligence manager.

“However, we have to pay the global market price for imported oil and gas, wherever it comes from. The money we pay for those imports is supporting jobs and companies in another country.

“That’s a key reason why it is always better to source energy from domestic sources rather than from imports. Oil and gas produced in UK waters is generating taxes, jobs and energy security that all benefit the UK. "

Mr Dornan added: “The UK continental shelf is a ‘mature’ basin, meaning the largest reserves have been found and exploited, so it is now in natural decline and cannot meet all our needs.

“However, it still contains gas and oil equivalent to about 15 billion barrels of oil. This would support the UK’s energy needs through the next three decades as we transition towards net zero. Far better to rely on our own reserves than on imports.

“That’s why we need to continue exploring the UK’s own waters for the new reserves of oil and gas at the same time as we expand and develop the low-carbon technologies of the future such as offshore wind, hydrogen production and carbon capture and storage.”

In March last year Norway became the largest supplier of gas to the UK with the amount of gas from Norway exceeding UK supplies for the first time, according to research by industry body Offshore energies (OEUK).

The UK consumed 76 billion cubic metres (bcm) of gas of which 32bcm were Norwegian and 29bcm were from the UK continental shelf.

Liam Kerr, Scottish Conservative Shadow Cabinet Secretary for Net Zero, Energy and Transport said: “The SNP Government’s reckless energy strategy wouldn’t just throw tens of thousands of Scottish oil and gas workers overboard and make colossal damage to our economy almost certain.

“It’s also foolish in environmental terms. No matter how fast we move to net zero – which everybody wants – the SNP’s own plans admit we’ll rely on a mixed energy supply for many years to come.

“Ditching our own abundant resources and expert industry while importing exactly the same thing from foreign suppliers can’t be anything but a more expensive, less secure and less environmentally responsible energy policy.”

He added: “It would be absurd if the SNP’s policies funded Norway’s oil and gas industry and paid their workers’ wages, while our own government betrayed tens of thousands of skilled Scots doing exactly the same job.”

The Scottish and UK Governments are at odds with the future of North Sea oil and gas exploration and production with the latter last year opening a new licensing round in the wake of Russia's invasion of Ukraine and concerns about energy security.

However, there is also considerable debate inside the SNP about the future of the sector.

Fergus Ewing, the former Scottish Government Cabinet minister and one of the SNP's most senior parliamentarians, last yer called for Scotland to "maximise" North Sea gas production in the wake of Russia's invasion of Ukraine and fears over global shortages.

He was backed by senior economist Professor Alex Kemp who said "there is a case" for several new gas fields off the Scottish coast to be allowed to operate.

Stephen Flynn, the leader of the SNP at Westminster, has reportedly been sceptical in private about the Scottish Government’s plans to accelerate winding down the North Sea oil and gas sector.

Energy policy and licensing decisions are reserved, but referring to the SNP/Green deal to share power at Holyrood the Ms Sturgeon underlined that the agreement made clear that "unlimited extraction of fossil fuels, or maximum economic recovery is not consistent with our climate obligations".

The Scottish Greens MSP Mark Ruskell said: "The vast majority of Scotland’s crude oil is exported into the global market; it’s a myth that North Sea oil is used for domestic consumption.

"Every country needs to move towards a phase out of oil and gas if we’re to maintain a liveable planet. There are no caveats to that.

“Scotland and the UK must seize the economic advantage in moving faster to develop expertise in areas such as marine energy, green hydrogen and decommissioning ahead of competitors such as Norway. This means investing in training and jobs to build the green industries of the future, not propping up the oil multinationals of the past.”

A Scottish Government spokesman said: “As a responsible government, we have set out a pathway, through our draft Energy Strategy and Just Transition Plan, to ensure a fair and just transition for our energy workforce, and to bring a new generation of skilled workers into the energy industry. In doing so, we have become one of the first countries to meet, head on, the practical and moral issues that come from a reliance on fossil fuels.

“Given the North Sea basin is mature and production is already in decline, any other course of action would only serve to put jobs and our economy at risk.

"Independent research based on industry projections finds that production in the North Sea will be around a third of 2019 levels by 2035 and below 3% of the 1999 peak by 2050. Meanwhile, as of 2019, only 16% of the oil and gas coming into Scotland (including imports from Norway and beyond), is consumed in Scotland.

“Reducing our energy consumption while ramping up our energy generation capabilities through renewables and hydrogen will mean that, in a net zero Scotland, we will not only be less reliant on importing oil and gas, but a net exporter of cleaner and greener energy to the rest of the UK and beyond.”