Report Calls for Increased Public Control of North Sea Oil and Gas Resources | Energy

North Sea oil and gas must be brought under greater public control to avoid a cliff-edge collapse of the industry and secure a sustainable future for workers and communities, according to a report.

Under the current private ownership model the inevitable end of North Sea oil and gas production – whether through government action or the lack of viable oilfields – will lead to private companies abruptly abandoning the basin, leaving frontline communities and the state to deal with the social and economic consequences, the authors predict.

However, the report by the Common Wealth thinktank argues that more state control of existing projects would allow an organised withdrawal, prioritising workers and communities, helping to manage the decommissioning of rigs, ensuring the UK’s energy security and accelerating the transition to clean energy.

Melanie Brusseler from Common Wealth said: “The question is how long we put off the inevitable and what we sacrifice the longer we cede control to the profit motive – stability, justice, and opportunities to build public wealth.”

The report calculates that if annual production continues at 2023 levels, the remaining North Sea reserves will run out in just under 14 years.

Big fossil fuel corporations are already pulling out of the basin as stocks dwindle – to be replaced by smaller, private equity players which are often more opaque and operate on the basis of short-term profits and quick exits. The authors say this increases the risk of a cliff-edge end to the industry.

At the same time, the report found the taxpayer will pay £10.8bn to decommission existing rigs – a figure that could rise significantly with the growth in private equity ownership.

Mathew Lawrence, the director at Common Wealth, said public coordination of the transition, including the government buying equity stakes in existing projects, would avoid these problems. He said: “Our new analysis underscores an often-ignored point in the debate: while oil and gas companies are making record profits, the public are on the hook for billions of pounds of decommissioning costs.”

Lawrence said this meant that even as the energy companies continued to distribute huge rewards to shareholders, it was the taxpayer who was expected to pick up the cost of the transition. “This risks a disorderly, insecure, and unfair energy transition, dependent on the whims of investors. A safer, more practical, and more cost-effective route would be to ensure public coordination and a planned transition were at the heart of plans for the North Sea.”

The report calls for the government to take equity stakes in existing projects based either on the amount companies have invested, or on the market value of shares.

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This would allow the government to manage a just transition and focus investment on new secure jobs and decommissioning – rather than private companies trying to wring the last drips of profit from dwindling reserves for shareholders.

Common Wealth argues that an initial equity investment by the state would not only help cut emissions and ensure a just transition, but would also be better value for the taxpayer in the medium term as it would be cheaper than an abrupt and chaotic end to oil and gas production, with all the social and economic devastation that would cause. Under public ownership, any remaining North Sea profits could then be invested in renewable energy schemes.

The Labour government has said it will not issue any new drilling licences in the North Sea and has increased the windfall tax on oil and gas profits.

A spokesperson for the Department for Energy Security and Net Zero declined to comment on the idea of state ownership, but said: “We are committed to investing in the clean energy industry through Great British Energy and our national wealth fund. We need to replace our dependency on unstable fossil fuel markets with clean, homegrown power controlled in Britain – which is the best way to protect bill payers and boost our energy independence.”