Former BP boss calls for end to new North Sea drilling licences

Former BP boss calls for end to new North Sea drilling licences

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Lord John Browne, the former chief executive of BP, has called for an end to new drilling licences in the North Sea, in an implicit endorsement of the Labour party’s position on fossil fuels. 

Writing in the Financial Times, he warns that political parties would be judged on their approach to climate change in the coming general election.

“A key test for the parties competing in this UK election is whether they have serious plans for the country’s green energy transition,” he wrote. “What will they do to combat climate change and its existential threats of famine and mass migration?” 

Browne, who ran oil major BP from 1995 to 2007, said that Britain would still need to use oil and gas for many years, so drilling in existing fields in the North Sea should continue. Licences that have been awarded already should also be allowed to continue, he added. 

“But beyond this, we should call a halt,” he wrote. “Such a move will reinforce our intention to get to net zero.” Developing those final “very limited” oil and gas resources remaining in the North Sea would make little difference to power prices or Britain’s energy security, he argued. 

While few companies plan to explore the North Sea for more oil, the support of Browne, a grandee of the UK’s oil and gas industry, for Labour’s policy sends one of the strongest signals yet that time is running out for the region. 

BP discovered the North Sea’s first gasfield in 1965 and struck oil in 1970 at Forties, the basin’s second-largest oilfield, which transformed the company’s fortunes. BP sold the field in 2003 to Apache for $812mn, as oil majors began to retreat from the region to search for bigger prizes elsewhere in the world. 

Browne, who is a crossbench peer, joined venture capitalist group General Atlantic in 2021, where he works on climate change investments. He did not explicitly give his backing to Labour, Britain’s main opposition party that has a commanding poll lead ahead of the general election on July 4.

However his position on ending new licences is in line with that set out by Sir Keir Starmer, the Labour leader, and his shadow energy minister Ed Miliband.  

Responding to Browne’s piece, Miliband said: “Lord Browne’s intervention adds his voice to the chorus of energy experts, including the International Energy Agency and the Climate Change Committee, who make clear that new oil and gas licences are not the right choice for Britain.

“The only way to boost our energy security, strengthen our economy, protect our climate and ensure long-term, good jobs here in Britain is by managing existing licences while sprinting to develop the clean energy industries of the future.”

Labour’s position on ending new North Sea licences has enraged some of its largest trade union backers, with the GMB describing the policy as “naive”. 

Last month, Sharon Graham, general secretary of the union Unite, warned Labour not to ban new North Sea licences without a clear plan to safeguard jobs, warning that workers in the industry risked becoming “the coal miners of our generation”.

One veteran oil and gas investment banker said that several deals he was working on had been paused until after the election because of the political uncertainty around the future of the North Sea. On Wednesday, Jersey Oil & Gas told investors that it would postpone work on its Buchan field, which is in the North Sea, for at least a year. 

A separate Labour policy for a tougher windfall tax on the sector has led to threats from the industry that it could stop work on some existing oilfields. Browne did not mention tax, but he did hold out a small olive branch for energy companies, suggesting that the estimated £40bn it would cost to decommission oil and gasfields could be avoided by leaving more of the infrastructure, such as drilling platforms, in place.