Stay informed with free updates
Simply sign up to the UK energy myFT Digest — delivered directly to your inbox.
Andy Burnham’s new energy secretary Miatta Fahnbulleh made a low-key visit to Aberdeen on Thursday to meet oil and gas industry figures hopeful that the government’s “pragmatic” approach will allow for more drilling in the North Sea.
Her trip comes as companies sense an opportunity to steer Burnham’s administration away from the agenda of Ed Miliband, now promoted to foreign secretary, who pursued the rapid deployment of renewable energy and introduced a ban on new exploration licences in the North Sea.
Fahnbulleh met industry players at the Port of Aberdeen, where officials have been complaining that the growth in renewables has yet to come anywhere near replacing oil and gas-related activity.
But she did not take media questions, increasing a sense of uncertainty about the new government’s direction on energy policy.
Burnham was also in Scotland on Thursday, meeting First Minister John Swinney, but likewise avoided questions from the press.
Some trade union leaders have criticised Labour’s goal of net zero greenhouse gas emissions by 2050 to combat global warming, arguing that it has damaged jobs in traditional industrial sectors. They have noted that Fahnbulleh has in the past shared Miliband’s focus on tackling climate change and called for a scaling back of burning fossil fuels for energy, the main cause of emissions. “You can’t get a paper between them on this stuff,” said one.
Breaking the Labour Party’s 2024 manifesto pledge of no new drilling licences is widely regarded as impossible by many Labour MPs. Lucy Powell, deputy leader, has said that Burnham’s approach would be a “change of emphasis” rather than a “change of policy”.
David Whitehouse, chief executive of industry group Offshore Energies UK, said it was an “important signal” that Fahnbulleh’s first visit as energy secretary had been to Aberdeen.
“We had a constructive discussion about the UK’s energy future and the need for a pragmatic approach to the transition,” he said. “We do not agree on everything but we share a common purpose.”
Scottish Labour politicians have been struggling to get a clear answer on how Burnham might boost oil and gas production in the north-east of the country to address job losses the industry claims are around 1,000 a month.
Oil and gas operators have also been calling for an early replacement of the 38 per cent energy profits levy, or so-called windfall tax, which is scheduled to end in 2030.
Before the US and Israel’s war on Iran broke out earlier this year, then-chancellor Rachel Reeves said she was considering bringing forward the replacement of the energy profits levy with a new mechanism, the Oil and Gas Revenue Levy, which is deemed more favourable to investment.
But climate campaigners describe any change to the tax regime as a handout to fossil fuel polluters.
The choice of Fahnbulleh, who has previously talked about bringing forward the net zero target from 2050 to the mid-2030s, has raised concerns among many in industry. But one figure said her acceptance of the role indicates that she agrees with Burnham’s re-industrialisation strategy, which could include prioritising domestic sources of oil and gas.
“We are going to have difficulties with new licences because of the manifesto, so movement on the EPL is more likely,” said one Labour MP. “We would be in a very sticky wicket with our membership and public if we did new drilling in new fields with new licences.”
The Rosebank and Jackdaw fields, which were consented by Rishi Sunak’s Tory government, are under review after developers submitted additional environmental information following legal rulings over the fields’ climate impact. The consultation periods close next month.
In her first public comments since her appointment, Fahnbulleh gave few clues about whether there would be a change in policy.
“We’re already drilling in the North Sea. We’ve been really pragmatic about this because oil and gas will be part of our energy mix for the foreseeable future,” she told Times Radio on Tuesday.
“I won’t get into decisions about particular applications because it’s a quasi-judicial process and I have to approach that and look at the evidence and do that objectively.”
Iain Lewis, chief financial officer of oil and gas group Ithaca Energy, said he was “encouraged to hear” Burnham’s commitment to re-industrialisation. He called for “immediate action to address the regulatory environment that is standing in the way of UK jobs, UK tax receipts and UK energy security”.
Sir Keir Starmer was widely believed to be in favour of approving Rosebank and Jackdaw and had introduced Transitional Energy Certificates permitting limited production in already explored areas adjacent to existing fields, known as “tiebacks”.
“Starmer may have wanted that, but he didn’t communicate it, they were afraid of their own shadow,” said one industry figure. “So even better communication around the whole issue would be a big change.”
