Industry groups urge UK to prioritise North Sea gas over LNG expansion

Energy industry bodies have cautioned the UK government to prioritise domestic North Sea gas production over expanding liquefied natural gas import capacity. The Aberdeen and Grampian Chamber of Commerce described the preference for foreign supplies as hypocritical, arguing that it undermines national energy security. This reaction follows a report in the Sunday Times, which cited a new interim report from the Department of Energy Security and Net Zero indicating that the prime minister could spend billions to shore up gas importation infrastructure.

Russell Borthwick, chief executive of the AGCC, stated that the recent paper exposes the contradiction in halting new North Sea production while acknowledging the need for gas for decades. He noted that the government explicitly warns that the decline of North Sea resources threatens energy security, yet it is considering unprecedented intervention to support additional LNG import capacity. Borthwick argued that blocking domestic production does not eliminate the need for oil and gas, but rather increases reliance on imports.

The interim report found general agreement among respondents that reducing regulatory barriers would enhance the UK’s competitiveness on the global LNG market. While 41 per cent of respondents indicated that existing LNG infrastructure is commercially viable, 45 per cent suggested there is a case for expanding storage capabilities at terminals. However, some respondents contended that current import capacity is sufficient or underutilised, questioning whether investing in a floating storage and regasification unit would materially improve resilience.

David Whitehouse, chief executive of the Oil and Gas UK, echoed these sentiments by calling for a focus on domestic production. He observed that the interim report lacked a commitment to prioritise North Sea gas to strengthen security. The AGCC further highlighted that importing LNG carries three times the emissions of domestically produced gas. The chamber criticised the government’s decision to ban new North Sea exploration licences and maintain the 78 per cent headline tax rate on oil and gas companies. Borthwick concluded that the North Sea decline is driven by government policy rather than geology, urging the removal of the Energy Profits Levy and the consent for the Jackdaw and Rosebank projects to replace imports with cleaner domestic production.