Reeves to Relax North Sea exploration, but has manpower shortage

Reeves to Relax North Sea exploration, but has a severe manpower shortage

Chancellor Rachel Reeves is preparing to quietly roll back Labour’s flagship oil-and-gas crackdown, opening the door to fresh North Sea exploration just months after promising to shut it down. The move lands today alongside her Budget, as the government publishes a new North Sea Strategy that reinterprets Labour’s manifesto ban so generously that new drilling becomes all but inevitable.

The plan centres on allowing “tiebacks” — extensions of existing fields that effectively function as new exploration licences. Long treated as small, technical add-ons, tiebacks are now being stretched to cover far larger projects, dramatically shifting the regulatory landscape. Officials insist this isn’t a green light for Rosebank, the giant and highly controversial field Labour spent years opposing, but the industry sees the writing on the wall: relax the rules, and Rosebank becomes all but impossible to stop.

The strategy arrives amid mounting pressure from an industry in deep decline. With investment at record lows and operators fleeing to markets with friendlier tax regimes, about 1,000 jobs a month are now evaporating from the North Sea, according to Robert Gordon University. The sector says Reeves’s tweaks will mean little unless she starts dismantling the 78% windfall tax years ahead of its 2030 expiry.

Trade leaders warn that without major tax concessions, tiebacks are a hollow gesture. The Energy Profits Levy, introduced as a temporary measure after Russia’s invasion of Ukraine, is now viewed by firms as a permanent chokehold. With oil prices long past their “windfall” highs, companies are demanding a “cap and floor” mechanism to stop the Treasury from gouging billions when prices spike again.

Aberdeen & Grampian Chamber of Commerce boss Russell Borthwick blasted the government for getting North Sea policy “badly wrong,” warning that keeping the windfall tax in place guarantees “thousands more job losses” and an accelerating corporate exodus.

For Reeves, the political gamble is clear: loosen Labour’s green promises to stop an industrial collapse — or keep the manifesto pure and watch the rig lights go out.

Key Takeaways

• Reeves to relax Labour’s de facto ban on new oil and gas exploration via expanded “tiebacks.”

• Industry says the shift is meaningless without cutting the 78% windfall tax, blamed for 1,000 job losses per month.

• Move increases the chances the massive Rosebank project will ultimately be approved.

SOURCE BBC