North Sea Gas “Saves Britain Billions a Year”
North Sea natural gas saved Britain billions last year and savings will be even higher this year amid sky-high prices, analysis has found, increasing pressure on the Government to boost production during the Iran war. The Telegraph has the details.
Tapping into its own resources of offshore gas instead of paying for imported liquefied natural gas (LNG) shipments saved the UK about £2.5 billion last year, according to analysis from investment bank Stifel.
The bank said savings on UK-produced gas would be “substantially higher” this year because prices have surged during the Middle East conflict.
Gas prices have soared by 56% since the start of the war as the threat of strikes has deterred tankers from passing through the Strait of Hormuz, where a fifth of global exports usually pass.
Meanwhile, missile damage at Qatar’s Ras Laffan plant, which produces a fifth of the world’s LNG, is expected to take three to five years to repair.
Stifel’s analysis will pile further pressure on Ed Miliband, who has banned new exploration in British waters and has so far rejected calls to extract more fossil fuels from the North Sea because of his Net Zero push.
The Energy Secretary has claimed that awarding new licences for North Sea drilling would do little to lower prices.
However, Chris Wheaton, an analyst at Stifel, said it was astonishing that Ministers were not ramping up production of North Sea gas, asking: “Doesn’t the Government realise there’s a war on?”
“Unsurprisingly – and we are frankly astonished that this has to be stated – the UK’s own North Sea gas is cheaper than imported LNG, and we estimate this saved the UK £2.5 billion in 2025 alone,” he said. “With the increase in global LNG prices due to the Persian Gulf conflict, we expect that amount will be substantially higher in 2026.”
The North Sea is still the UK’s biggest gas source, accounting for around 45% of its supplies. The other 35% comes from piped gas from Norway, while 20% is LNG imports.
The Climate Change Commission has said Britain will still need oil and gas beyond 2050.
According to Stifel, this imported LNG has been, on average, 18p per therm more expensive than North Sea gas over the past few years, with this gap helping Britain save about £2.5 billion in 2025.
“To minimise the cost of energy for the UK, the UK needs to maximise its own gas production,” Wheaton added.
Worth reading in full.
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Well, who’d of thought it!?
Drill!
Note that there has been a certain amount of investment in LNG import facilities, including long distance pipelines. Someone will make a profit from that eventually. https://en.wikipedia.org/wiki/South_Wales_Gas_Pipeline
I doubt the pipelines carry LNG.
Importing rather than using your own gas or anything else is an expensive. Comparative advantage does not apply in this case.
But, but this can’t be true because all of the green, socialist Milibrain acolytes keep telling me that gas is priced on the international market so using our own gas isn’t cheaper. Surely this bank report must be wrong, surely??? Or are they and the MSM just feeding us a right load of billionaire funded bull. I think I know. It’s the same as the line that the reserves under the North Sea are declining, so it’s not worth extracting them. Makes you wonder if they go into their fridges each day and see that there is less milk than yesterday, so it’s not worth drinking it and they let it rot. For god’s sake, if it’s there in any quantities, just use it now for our benefit.
If the ‘international market price’ (which we are told is set by foreign dictators and enemies) for gas and oil goes up then so will the profit before tax of extraction companies the state allows to operate in the North Sea. If their PBT goes up so will the state’s tax take – without changing any policy. Similarly, the UK imposes import duties on LNG. If the price goes up, so will the tax take – again, without changing policy. A more expensive product also means that the end consumer will pay more VAT – yet again, without any change of policy. The question is, on which does the UK get better tax revenue? My suspicion is the answer is imports rather than home-produced purely because otherwise the government would opt for more drilling. It’s important to state that the taxes are all eventually paid by the consumers – us. I have no doubt the likes of Miliband try to assess just how much tax pain we will stand before rebelling. While making us hurt he can claim that the source of the pain is those foreign dictators and enemies and then condemn another 7 square miles of Lincolnshire farmland… Read more »