UK (Parliament Politics Magazine) – The Common Wealth report warns that private ownership could lead to a sudden North Sea oil and gas decrease, leaving taxpayers with a £10.8bn bill.
The think tank’s report predicts that the current model of private ownership will lead to a decline in North Sea oil and gas production, either through government action or the depletion of oilfields. As a consequence, companies will pull out of the region, leaving both local communities and the UK government to handle the economic and social challenges.
What did the Common Wealth report say?
According to the Common Wealth think tank, greater state control over North Sea operations would lead to a more structured withdrawal. It would also safeguard workers, handle the decommissioning process, strengthen energy security, and support the move to renewable energy.
Common wealth warns against profit-driven delay
A political economist and the Programme Director at the think tank Common Wealth, Melanie Brusseler from Common Wealth stated, “The question is how long we put off the inevitable and what we sacrifice the longer we cede control to the profit motive – stability, justice, and opportunities to build public wealth.”
Private equity risks for North Sea oil
The report warns that if production continues at 2023 rates, North Sea oil and gas reserves will run dry in less than 14 years.
Major fossil fuel firms are leaving the North Sea due to a lack of resources, with smaller companies focused on quick profits. The think tank report says this could raise the threat of a sudden collapse of the industry.
The document further reveals that taxpayers will be responsible for £10.8bn in decommissioning costs, a figure that could rise significantly with the increase in private equity ownership.
Lawrence calls for public control in energy transition
The director of Common Wealth, Matthew Lawrence, argues that the government’s role, such as buying equity in current projects, is essential to tackle potential issues during the transition.
He stated, “Our new analysis underscores an often-ignored point in the debate: while oil and gas companies are making record profits, the public is responsible for billions of pounds of decommissioning costs.”
The future of the North Sea is central to the UK's energy security.
— Common Wealth (@Cmmonwealth) January 11, 2025
Leaving the transition to the market will be too slow, disorderly and unfair. But what is the alternative?
Our new report argues public action is key to a safe transition.
🧵https://t.co/ekEwPr97yh
Mr Lawrence highlighted that while energy firms continue rewarding shareholders, taxpayers are expected to bear the cost of the energy shift. He raised concerns about an insecure and unpredictable energy future and added that public coordination and a proper strategy are required for the North Sea.
Report urges government stake in North sea projects
The report further suggests that the state should acquire ownership stakes in current projects, relying on either the investment firms have made or the market value of the shares.
This approach would allow the government to focus on creating new jobs and handling decommissioning rather than allowing private firms to take profits from declining resources.
Common Wealth says that government investment would cut emissions, promote a fair energy shift, and be cheaper for taxpayers than a sudden oil and gas production shutdown. The remaining profits could fund renewable energy projects.
Centrica warning about gas shortage in Britain
On Friday, the country’s largest gas storage facility, Centrica, reported that the UK had ‘less than a week of gas demand in store’ due to extreme cold weather.
In response, No 10 confirmed that the UK has enough supply to meet winter demand and dismissed Centrica’s claim as “false.”
The Labour government has confirmed it will not authorize any drilling license in the North Sea and has raised the windfall tax on oil and gas earnings.
The Department for Energy Security and Net Zero declined to comment on state ownership. Still, it stated, “We are committed to investing in the clean energy industry through Great British Energy and our national wealth fund.”