Chancellor Rachel Reeves has suggested Labour could soften its stance on North Sea oil and gas in November's Budget.
Industry leaders have warned that Labour’s proposed ban on new licences is driving investment and jobs out of the basin, while leaving the UK more reliant on costly energy imports.
The Chancellor’s remarks come as Shell announced first gas from its Victory field west of Shetland, which at peak production will provide enough energy to heat around 900,000 homes a year.
Responding to a question during a business event on the fringe of Labour Conference, Ms Reeves said: “I talked about homegrown energy, and that is renewables but it is also in the North Sea as well.
“Ahead of the Budget, we should be publishing our North Sea strategy, which I hope will give some certainty to (the sector) to be able to invest in the UK.
“We are going to be reliant on oil and gas for many years to come, and I would prefer us to be using oil and gas from the UK than importing in from overseas.”
Her intervention is the clearest sign yet that Labour may climb down from its hard line on North Sea licensing, with the industry now awaiting the government’s strategy for clarity on future investment.
Since Labour took office, firms including Apache and ExxonMobil have announced plans to exit the North Sea, while others have frozen projects amid political and fiscal uncertainty.
Executives warn that without a stable and investable policy framework, the UK risks accelerating the basin’s decline, losing tax revenues and skilled jobs long before the transition to clean energy is complete.