Liz Truss will approve up to 130 new oil and gas drilling licences in the North Sea in one of her first major acts as prime minister.
Senior allies of the Tory leadership frontrunner have been putting together her response to the energy crisis, with average annual household bills due to rise to £3,549 from October.
Kwasi Kwarteng, the Business Secretary, and Jacob Rees-Mogg, the Brexit Opportunities Minister, have been meeting oil and gas companies to negotiate a deal to secure energy supplies this winter, according to The Times.
Mr Kwarteng, who is likely to be made Chancellor if Truss becomes prime minister, has led the drive over the past year to increase North Sea drilling.
Mr Rees-Mogg is being tipped for the position of Business Secretary after he was entrusted with helping to develop Truss’s policy on energy. He reportedly held another meeting yesterday with senior executives at Total and Shell.
The North Sea still contains gas and oil equivalent to about 15 billion barrels, according to the latest estimates from Offshore Energies UK, based on figures from the North Sea Transition Authority. Britain’s total energy consumption equates to about a billion barrels of oil a year.
Up to 130 new licences
In February, the independent Climate Change Committee sent a letter to Kwarteng, saying that there should be a “presumption against exploration”.
However, if she wins, as expected, Ms Truss will invite applications for drilling licences to explore new fields, The Times says. As many as 130 licences will be issued, insiders believe.
The last time the government began a licensing round was in 2019, which resulted in the award of 113 licences.
In addition to pushing forward with the new licensing round, a Truss government would encourage oil and gas companies to invest in their existing sites to maximise production.
When the government announced a windfall tax on the profits of oil and gas companies this year, it included an investment allowance that handed companies 91p in tax savings for every £1 invested in the North Sea.
Mr Kwarteng had hoped to fast-track plans to develop six untapped fields in the North Sea, some of which had secured government approval decades before.
An application from Shell to extract oil from the Jackdaw site received the go-ahead, but is now entangled in a case brought by Greenpeace.
Equinor has also submitted plans to extract 70,000 barrels of oil a day from the Rosebank field, which it says will meet 8% of British production by the end of the decade.
Ms Truss is likely to support plans, The Times says, with drilling expected to begin in 2025.
Musk supports more oil and gas
Meanwhile, Tesla founder Elon Musk has said civilisation will crumble without oil and gas as he warned the switch to green energy will take a decade.
The billionaire told the ONS energy conference in Norway that the world needed to continue extracting oil and gas while it builds out renewable energy.
He said that the transition to sustainable energy was “one of the biggest challenges the world has ever faced", adding: "Realistically I think we need to use oil and gas in the short term, because otherwise civilization will crumble."
Asked if Norway should continue to drill for oil and gas, Musk said: "I think some additional exploration is warranted at this time."
"One of the biggest challenges the world has ever faced is the transition to sustainable energy and to a sustainable economy," he said. "That will take some decades to complete."
The entrepreneur said offshore wind power generation in the North Sea, combined with stationary battery packs, could become a key source of energy.
He said: “It could provide a strong, sustainable energy source in winter."