Every day I look at the extraordinary story of the Rosebank and Jackdaw oil and gas fields in the North Sea and shake my head.
As chief executive of Hunting, one of Britain’s oldest engineering companies serving the oil and gas sector, seeing these two hugely valuable sources of domestic energy stranded beneath British waters – not because they cannot be reached, but because ministers cannot decide whether they should be – has been a source of frustration for much of the two decades since they were discovered.
But never more so than now, as millions of British households consider another painful rise in their energy bills after regulators Orav increased the price ceiling by 4 percent, bringing the average annual bill to £1,723.
The reason, we are told, is the ongoing conflict in the country Iran and the resulting turmoil in international energy markets.
And that may be true, but it doesn’t tell the whole truth. Because while the conflict has undoubtedly affected wholesale prices, the reality is that the war has exposed Britain’s vulnerability; it did not create it.
That vulnerability was created at Westminster, through a series of catastrophic policies, based on a deliberate denial of how this country keeps the lights on.
These include the huge taxes – today the nominal tax rate on oil and gas profits from the North Sea is as much as 78 percent – a refusal to issue new exploration permits and an apparent determination to leave vital projects like Rosebank and Jackdaw trapped in regulatory limbo, which has left the country increasingly dependent on imported energy.
The result is not only a catastrophic failure to protect the country’s energy supply – as we have seen in recent months, with a conflict thousands of miles away sending prices soaring – but a country that, in the eyes of many international companies, is now uninvestable.
BP remains trapped in what can only be described as the cult of Net Zero, the pursuit of which has become akin to a religion in this country, writes Jim Johnson.
Unfortunately, I can testify to this from painfully close quarters. In recent years we have made the very difficult decision to significantly reduce our presence in the UK, closing four of our six UK sites, resulting in the loss of dozens of highly skilled jobs. Today, in addition to our 30-strong London headquarters, we only have a production facility in Badentoy, Aberdeen, and a recently acquired business in Ashington, Northumberland.
We continue to value the extraordinary workforce and technical expertise that Britain has. But the reality is that as a global company we have to make relative decisions when it comes to where we invest. Capital is not patriotic; it goes where it is welcomed and respected.
I take this personally. I spent four wonderful years working in the North Sea in the 1990s, based in Aberdeen, the birthplace of Hunting’s modern oilfield services business. We employed many hundreds of people there. Aberdeen was a place of ambition and ingenuity, home to a once world-class industry now decimated by government policy.
It’s not just hunting. One of our biggest customers was the American energy company Apache – until it stopped drilling in the North Sea in 2023, blaming the increasingly onerous tax regime. The country then announced that it would end production in the North Sea altogether.
Now BP has put its entire oil and gas business in the North Sea up for sale, potentially putting an end to more than sixty years of production in its home country. Earlier this month it announced plans to develop a major offshore gas field in Venezuela.
You might imagine that the decision by a once proud British company to withdraw from British waters and pursue projects abroad would be a wake-up call for ministers. Far from it. Instead, they remain trapped in what I can only describe as the cult of Net Zero, the pursuit of which has become akin to a religion in this country.
Let me be clear: energy companies are not indifferent to climate change and the industry has invested heavily in making production cleaner and more efficient.
But the environmental ambition must be reconciled with another goal: improving people’s living standards. A policy that closes factories, destroys jobs, weakens the tax base, encourages investment abroad and makes households pay more for energy cannot be considered an unmitigated success.
Especially since the reality is that, despite all the green flags, Britain still gets most of its energy from fossil fuels (last year it consumed around 70 billion cubic meters of gas and 60 million tonnes of oil). What has changed is that, because production in the North Sea has fallen, an increasing share has to be imported.
This is the great deception at the heart of our Net Zero debate. Britain may congratulate itself on cutting emissions within its borders, but it is still importing the same hydrocarbons from abroad, sometimes from countries operating under environmental standards well below Britain’s – whose offshore production is among the most tightly controlled in the world, alongside Norway. Imported energy also needs to be transported, which creates even more emissions and costs.
It is also not true, as is so often suggested, that Britain has run out of oil and gas. Significant potential remains beneath British waters. Technology is advancing, allowing companies to extract reserves that were once considered uneconomic or inaccessible.
What politicians do not understand is that this is not an eternal choice between oil and gas and a transition to cleaner energy. The question is whether that transition is affordable and rooted in reality, or whether it destroys the foundations of the economy in the pursuit of arbitrary goals.
A modern industrial nation needs abundant, reliable and competitively priced energy. Energy is not just a sector of the economy: it is the foundation on which every other sector depends.
The tragedy is that Britain ever understood this. Hunting was founded in 1874 as a shipping company. In the early 20th century, our founder, Charles Hunting, expanded into the emerging oil business and ordered one of the world’s first purpose-built bulk oil tankers.
During World War II the company manufactured fuselages and tail frames for heavy bombers, including the Lancaster. Today we use advanced engineering to make high-pressure equipment for subsea oil and gas wells, as well as precision components for aircraft and spacecraft.
We have been adapting to changing global demands for more than 150 years. But no company can adapt to a government that makes investments irrational.
Ministers will discuss rebuilding British industry, improving living standards and protecting households from volatile international markets. Yet their energy policies work against each of these goals.
Jim Johnson is CEO of Hunting.
