UK Energy Secretary Ed Miliband has vetoed a plan by the Treasury to boost North Sea oil and gas drilling in order to fund part of Britain’s increased defense funding needs, The Telegraph reported on Thursday, citing a government source.
As the UK plans to increase funding for military programs and rearmament amid heightened geopolitical tensions, the Treasury has proposed a plan to boost drilling in the UK North Sea and use the higher tax revenues from said drilling to fund part of the $24 billion, or £18 billion, the Ministry of Defence seeks for military purchases.
The plan was presented to the Prime Minister, Sir Keir Starmer, but the energy secretary Miliband, who has fiercely opposed any expansion of North Sea drilling, had “vetoed” the proposal, the source in the cabinet told The Telegraph.
Ultimately, the plan wasn’t approved.
Britain now faces a renewed debate over the future of its North Sea oil and gas resources after Starmer resigned earlier this week, setting the stage for a new British PM and a new Chancellor to take over by September.
Analysts say the political turmoil in the umpteenth PM resignation over the past decade could be a chance for the UK leadership to rethink the use of the North Sea resources to boost energy security by reducing dependence on imported oil and gas.
The Starmer government had just moved to ban permanently the issuance of new North Sea oil and gas licenses.
With a new PM and government expected to come into office by September, there is room for a rethink of the most recent policy.
Meanwhile, the offshore energy industry continues to call for predictable taxation policies and allowing companies to continue exploring the North Sea for homegrown oil and gas resources. This would boost the UK’s energy security, raise tax receipts for the government, protect hundreds of thousands of jobs in the offshore oil and gas sector, and strengthen the domestic energy supply chain and prepare it for the energy transition, the industry says.
By Michael Kern for Oilprice.com
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