Minister consulted BP over ‘right incentives to maximise’ oil production, FoI reveals | Oil
The energy and climate minister Graham Stuart asked BP about the incentives required to “maximise” extraction of oil and gas from the North Sea, documents released under freedom of information rules have revealed.
Stuart’s meeting with the corporation’s UK boss, Louise Kingham, last year came days after BP had announced a record profit of $28bn (£23bn) for 2022, raised its dividend to shareholders, and rowed back on its aim to cut its carbon emissions by 2030. Households were also enduring very high energy bills. BP will report its profits for 2023 on Tuesday.
Stuart also asked for advice from Kingham about winning the argument that UK oil production was “good” and part of the net zero transition. Experts have repeatedly refuted arguments that new oil and gas production can increase UK energy security or lower prices.
The UK’s oil and gas body granted 24 new drilling licences to BP and other companies last Wednesday, following 27 licences in October and with more to follow in the coming months. The chair of the UK’s official climate advisers said in January that “further licensing [is] inconsistent with climate goals”. The International Energy Agency said in 2021 that any new fossil fuel developments were incompatible with reaching net zero emissions by 2050.
“Drilling for new North Sea oil will undermine the UK’s climate commitments and won’t ensure energy security, yet the minister cynically sought BP’s help to try and ‘win’ the opposite argument,” said Chris Garrard, of the campaigns and research organisation Culture Unstained, which made the FoI request.
“What’s more disturbing though, is that days after BP had announced record profits, he seems to assure BP that there are incentives and money to keep its polluting fossil fuels flowing, all while the public struggled to pay their energy bills,” he said.
The documents released include a heavily redacted readout of a meeting between Stuart and Kingham on 17 February 2023. Stuart asked: “Where do you think we are in terms of having the right incentives in place to maximise recovery from [the] North Sea and keep making the case to win the argument why producing it in the UK is good, and is part of the net zero transition, to make sure we minimise our imports?”
He said: “The money is there, making incentives and structures to allow it to flow.”
Stuart also asked Kingham for information to use in making the argument for new North Sea production: “We will be using oil and gas and, if we don’t do it ourselves, we will be spending that money elsewhere. Adding that up I would like a number saying do we really want to spend x billions relying on foreign imports.”
Large sections of Kingham’s responses are redacted, with government officials citing “commercially confidential information”. But she said: “Ideologically, you need to think where to do tax or incentives, because you won’t get the investment.” She also said BP was “proud of [its] work and the jobs it creates and ever cleaner barrels”, adding that the argument would be “amplified by some social media and ads”.
Tessa Khan, at the campaign group Uplift, said: “BP’s got a nerve telling our government that the industry needs more tax breaks and subsidies or they won’t invest, in the middle of a cost of living crisis driven by energy bills and when it’s just announced $28bn in profit.”
“What’s really egregious, though, is the minister responding that ‘the money is there’ for profiteering oil giants at the same time as it’s just cut off vital support to millions of households who literally can’t afford to heat their homes,” she said. “There’s no question at all about whose side this government is on.”
A government spokesperson said: “Minister Stuart is absolutely right to be backing domestic oil and gas, as the UK will still be using oil and gas even when we reach net zero in 2050. It is good for our energy security, supports up to 200,000 jobs and has brought in £400bn in tax revenue to date [over the past 50 years] which has been used to help families with the cost of living and fund public services. The £6bn raised by our energy profits levy on oil and gas producers alone helped us pay around half a typical household’s energy bill last winter.”
“Ministers will continue to meet with energy companies to encourage investment into the UK and end reliance on costly foreign imports of liquefied natural gas with higher emissions,” she said.
A spokesperson for BP said: “BP is a major UK-headquartered company with plans to invest significantly in the UK’s energy systems and transition. As such, we have regular meetings with government departments. This discussion focused on how the UK could continue to attract investment and maintain pace after the US Inflation Reduction Act in both today’s oil and gas system and in renewable and low carbon projects.” The act supports renewable energy.
Fossil fuel companies have received £80bn in UK government support since 2015. Most of the 24 new drilling licences were granted to foreign companies. On Friday it was revealed that an oil and gas company owned by a major Tory donor, which had previously been fined for illegal flaring, was awarded one of the drilling licences.
In January, the former Conservative energy minister Chris Skidmore resigned as an MP in protest at the party’s dash for oil and gas, calling the policy a “tragedy” that is “wrong and will cause future harm”.
