The UK Government is being urged to clarify its stance on domestic energy production after Energy Minister Michael Shanks claimed there was no “material difference” between oil and gas imports and production from the North Sea.
In a letter sent to the UK Government, Aberdeen & Grampian Chamber of Commerce (AGCC) said the remarks – made by Mr Shanks during a Westminster committee hearing last week – had caused “significant alarm” among its 1,300 member businesses and workers across the energy sector.
Mr Shanks told MPs on the Scottish Affairs Committee that North Sea job losses were being driven by geology, not government policy, and suggested the UK economy would see no real benefit from prioritising homegrown energy over imports.
But AGCC has hit back, describing those claims as “deeply flawed” and warning that government decisions – including the continuation of the windfall tax and a ban on new oil and gas licences – are actively accelerating decline in the basin.
In his letter, Chamber chief executive Russell Borthwick pointed out that North Sea production supports around 200,000 UK jobs and has generated £400billion in production taxes since the 1960s.
He added: “The North Sea could remain a highly investible proposition were it not for a punitive tax regime and policy uncertainty, which is entirely of the government’s own making.
“Ultimately this is the cause of accelerated decline, which is putting the UK’s energy industry at risk and threatening tens of thousands of jobs.”
The Chamber has cited data from the UK Government’s own Energy Trends Report, which shows gas imports rising by 19% year-on-year while domestic production has fallen 20% compared to pre-pandemic levels. Liquefied Natural Gas (LNG) imports rose 42% in the same period.
Mr Borthwick said it was contradictory that the UK is ramping up reliance on high-emission, foreign fossil fuels that support no UK jobs or tax revenue – while strangling a domestic industry that could meet up to half of the country’s oil and gas needs and generate £165billion in additional economic value.
The letter also references stark warnings from Robert Gordon University that without a change in course, the UK could face Grangemouth-scale job losses “every fortnight for the next five years.”
AGCC has urged the minister to clarify his comments and to restate the government’s support for domestic production, arguing it is crucial to maintaining energy security, protecting jobs, and delivering a just transition.
“The material difference between imported vs domestically produced oil and gas is losing these people and the world-class supply chain firms from the UK for good as they refocus on international markets – a situation already unfolding before our eyes,” the letter warns.
The Chamber is calling for the Energy Profits Levy to be scrapped “as soon as practicable” and reiterated its willingness to work with ministers to develop a stable industrial strategy for the North Sea.