July 30, 2021 Read More →

UK net-zero goals at risk due to foreign control of North Sea licenses

The Guardian:

Foreign control of North Sea oil licences could put the UK’s plans to reach net zero emissions at risk, a study has warned.

The research shows state-backed fossil fuel companies and private equity firms are taking a tighter grip on North Sea oil, raising concerns about the government’s ability to wind down fossil fuel production and secure a “just transition” for workers.

The study by the Common Wealth thinktank, and research by climate journal Desmog, reveals that more than a third of the licence blocks in the North Sea now have a private or state-backed controlling interest, with fossil fuel firms from China, Russia and the Middle East playing an increasingly dominant role.

Unlike the oil majors, many of these companies do not face public scrutiny, are not accountable to shareholders and are not required to have the same degree of corporate governance as leading listed businesses.

Campaigners say this is potentially “catastrophic” for the UK’s plans for a rapid and fair transition towards a low-carbon economy, despite efforts by the Oil and Gas Authority (OGA) to bring the industry to heel.

In recent years oil majors such as BP and Shell have begun to retreat from the North Sea, leading to a sharp rise in private equity firms and state-backed companies taking up licences, which could raise new challenges for the industry’s regulator. In 2010, private companies’ collective share of production in the North Sea was just 8%, but this jumped to 30% in 2020, according to data from Rystad Energy.

[Matthew Taylor and Jillian Ambrose]

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