Labour Signals Shift on North Sea Oil Strategy Amid Industry Pressure and Energy Concerns

Labour’s stance on North Sea oil and gas extraction appears to be shifting, with Chancellor Rachel Reeves indicating a softer approach towards the much-criticised crackdown on new drilling. As Britain faces increasing reliance on expensive energy imports, Reeves emphasised the importance of “homegrown energy”, explicitly including oil and gas from the North Sea alongside renewables in her remarks at Labour’s annual conference.

The Chancellor addressed business leaders by reaffirming the UK’s ongoing dependence on oil and gas for years to come. Reeves stated her preference for using domestic resources rather than relying on foreign imports, arguing this is essential to national and energy security. She elaborated that Labour’s forthcoming North Sea strategy will aim to provide certainty for investors within the sector.

Pressure has been mounting on Ed Miliband, the Energy Secretary, to ease plans for a ban on new licences for North Sea extraction. Recent proposals floated by Miliband suggest possible allowances for new exploration adjacent to existing fields, a move seen as a pragmatic response in the face of domestic production decline and industry lobbying.

Despite government efforts to phase out drilling, North Sea activity persists. Shell recently commenced production at the Victory gas field west of Shetland, developed in collaboration with Equinor. This field is projected to reach output levels sufficient to power around two percent of UK homes and businesses at its peak, though it is expected to be depleted by the decade’s end. Shell’s Simon Roddy highlighted the role such projects play in ensuring the affordability and stability of UK energy supply during the transition to renewables.

Industry figures report that Labour’s policies to date have already triggered an exodus of international companies, including Apache and ExxonMobil, due to perceived uncertainty and an unfavourable tax regime. Treasury officials have been advised that speeding up the decommissioning of rigs could undermine tax receipts, as companies seek associated reliefs.

Reeves remains clear that she is not “a zealot of green energy,” underlining that energy resilience now equates to national security. The evolving Labour position, while attempting to balance net zero ambitions, appears increasingly attuned to the short- and long-term realities facing the energy sector and the British economy.