Energy Minister Michael Shanks has said he believes there is no “material difference” between oil and gas imports and domestic North Sea production.
In comments which are likely to further frustrate workers and unions, Mr Shanks told the Scottish Affairs Committee at Westminster that offshore job losses are being driven by geology rather than the policies of the Labour Government.
Since coming into power a year ago, Labour has increased tax on North Sea production to 78% and followed through on its manifesto pledge to ban new licences.
The industry is now losing thousands of jobs, and one operator - Harbour Energy - is currently in the process of making a quarter of its North Sea workforce redundant, directly blaming the UK fiscal regime.
Meanwhile, energy imports - which do not pay UK tax, do not support jobs and which can be up to four times more carbon intensive - have soared to record levels. The latest UK energy trends report for January-March 2025 shows imports of gas increased by a 19% annually, while domestic production is down 20% compared with pre-pandemic levels (2019).
Asked whether the UK economy would benefit from prioritising domestic production, which supports around 150,000 UK jobs, over imported oil and gas, Mr Shanks said he did not “think it makes a material difference”.
“We don’t own what’s extracted from the North Sea, it’s owned by private companies who trade on an international commodity market and who trade based on what the international price, which is not set by Britain, is for anything they extract from the North Sea,” he said.
“So although the receipts that come from offshore extraction obviously contributes significantly to the treasury, I don’t think it makes a material difference in that long-term trajectory.
He added: "The truth is we’ve been importing significant amounts for so long that our energy mix actually is a diverse mix of imported LNG and others.”
Mr Shanks said for too long the UK has “buried our heads in the sand and said this transition isn’t happening while thousands of jobs have gone around us”.
“The transition is underway. It’s not something that is driven by government policy but by the geology of the North Sea,” he said.
He told the committee that “there’s a natural decline happening in oil and gas and that’s just a reality”.
“We will need oil and gas for many years to come and it’s an important part of our energy mix… but so too is our mission to move towards clean power by 2030,” he said.
“The truth is that much of the gas that’s extracted from the North Sea is exported, and so what we’re trying to build towards is a stable power system that removes gas from the system.”