(WO) — The UK government is reportedly considering investment in additional LNG import capacity as domestic North Sea production declines, prompting criticism from industry and business groups over the country’s offshore oil and gas policies.
The Sunday Times reported that the government is considering spending billions of pounds on facilities to increase imports of LNG. The proposal comes as the UK faces declining domestic gas production and has moved to restrict new North Sea exploration licensing.
Aberdeen & Grampian Chamber of Commerce (AGCC) said the potential expansion of LNG imports underscores concerns that declining North Sea production will leave the UK increasingly dependent on overseas energy supplies.
“The government admits we will need gas for decades to come, warns explicitly that the North Sea decline threatens our energy security, and is now considering unprecedented intervention to support additional LNG import capacity, potentially costing billions,” said Russell Borthwick, chief executive of AGCC.
The Chamber argued that imported LNG can carry a higher emissions footprint than domestically produced gas and called on the government to support continued North Sea development as a means of limiting import dependence.
The debate comes as the UK government maintains restrictions on new North Sea exploration licenses and the industry faces a headline tax rate of 78% under the Energy Profits Levy.
Borthwick also pointed to the proposed Jackdaw and Rosebank developments, arguing that bringing additional domestic resources online could help offset declining UK production and support energy security.
“If you block North Sea production, you get imports,” Borthwick said. “It would therefore defy belief for a Prime Minister to block production at Jackdaw and Rosebank—two fields which alone could provide around 10% of our future gas supply—only to then wave in tankers carrying higher-carbon LNG from overseas.”
The Chamber called for the Energy Profits Levy to be removed and for additional North Sea projects to receive approval, arguing that continued investment would support domestic production, employment and government revenues.
The reported LNG proposal adds to an ongoing debate over how the UK will meet natural gas demand as production from its mature North Sea basin declines and the country’s reliance on imported energy increases.
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