What Does an Election Mean for UK Oil and Gas?
With the recent failures of the UK government to pass a deal for leaving the European Union next month, a general election this summer seems possible, despite both the Prime Minister and the Home Secretary ruling out a snap contest in June. If there were to be a general election soon, what would it mean for the UK oil and gas industry?
Conservative Government
According to the official manifesto of the Conservatives, the party promises to “ensure that the sector continues to play a critical role in our economy and domestic energy supply, supporting further investment in the UK’s natural resources”.
Furthermore, the Tories pledge to support the development of the decommissioning industry by investing in the creation of a multi-use yard and the UK’s first ultra-deep-water port.
Another crucial pledge of the Conservative manifesto is the development of the shale gas industry. To support the sector, the Tories are looking to change the planning law for shale applications, which would see major shale planning decisions being made the responsibility of the National Planning Regime.
The Conservatives are also looking to change the previously proposed Shale Wealth Fund to ensure that a greater percentage of tax revenue from shale gas goes directly to the communities that host the extraction sites.
Labour Government
The Labour party’s energy policy is largely based on a mix of renewables, nuclear, green gas, carbon capture and storage and coal in order to “put the country back on track to meet the targets in the Climate Change Act and the Paris Agreement”.
However, Labour recognises that the oil and gas industry is likely to play a major role in the country’s energy mix for the next 15-20 years, at least, and the party is planning a strategy to protect vital North Sea assets and the jobs that depend on them.
Last year during Scotland’s Labour Conference in Dundee, Labour leader Jeremy Corbyn suggested that he would order a review of North Sea oil and gas taxes if he becomes the next prime minister.
“I would look very carefully at tax changes that make sure you don’t subsidise the destruction of the industry but instead that any tax changes are linked to training, are linked to investment, are linked to the development of new industries and research into high-quality products and techniques for the future,” Mr Corbyn said at the conference.
On a visit to Scotland in December last year, Shadow Chancellor John McDonnell said that if Labour wins the next general election they would use a £70 billion fund, delivered to Scotland over ten years, to support the offshore industry.
In contrast to the Conservative party, Labour strongly opposes the development of the shale gas sector.
“Labour will ban fracking because it would lock us into an energy infrastructure based on fossil fuels, long after the point in 2030 when the Committee on Climate Change says gas in the UK must sharply decline,” says the party’s official manifesto.
North Sea Oil and Gas
The oil and gas industry in the North Sea has provided more than £300 billion in tax revenue to the UK economy and supports thousands of highly-skilled jobs across the country.
The next general election in the UK is officially scheduled for the 5th May 2022, according to the terms of the Fixed Term Parliament Act 2011.
Source: Rigzone