Boris Johnson is preparing to unveil a new UK “energy supply strategy” in the wake of Russia’s invasion of Ukraine that could involve more oil and gas production in the North Sea.
The Prime Minister insists he is not reneging on the government’s pledge to cut carbon emissions but says the UK needs to be more self-sufficient in terms of its energy sources.
As Britons grapple with a widespread cost-of-living crisis, the government’s new energy supply strategy is not expected to provide immediate relief to households facing the crisis. electricity and gas bills soar.
But with pressure mounting on energy suppliers, government officials say the Treasury is preparing a second bailout of hundreds of millions of pounds for Bulb, the electricity and gas was specially operated in November, unless an unexpected contractor turned up.
The UK energy market is being driven by continued sharp increase in oil and gas costs after Moscow’s outright invasion of Ukraine.
Johnson said at a news conference on Monday that ministers were looking at the option of using more oil and gas from British sources.
“It is absolutely the right thing to do to get rid of our dependence on Russian hydrocarbons, but we have to take it step by step,” he said.
“We have to make sure we have alternative supplies. One of the things we’re looking at is the ability to use more of our own hydrocarbons. . . We need to strengthen our self-reliance.”
As well as potentially increasing the UK’s North Sea oil and gas production, Johnson’s strategy is expected to involve more nuclear and renewable energy.
Kwasi Kwarteng, the Business Secretary, does not see shale gas as part of Britain’s energy mix and is resisting calls by Conservative MPs to end the mining ban.
Johnson, who has backed the UK’s pledge to net zero emissions by 2050, said Western countries would work together to find alternatives to Russian hydrocarbons.
UK wholesale gas prices followed oil gains on Monday after the US said it was in “active discussions” with European countries about a ban on imports of Russian crude.
UK gas prices hit a new record 800p per barrel at one point in a volatile session, before falling back to 501p, up 8% on the day. A year ago gas prices in the UK were trading around 40p per barrel.
Brent crude rose to $139 a barrel, before falling back to around $120. Average petrol prices in the UK hit a peak of £1.55 a liter for the first time, according to the RAC.
Even before Russia invaded Ukraine, UK energy bills were already running high after regulator Ofgem said the price cap for 22 million households would rise 54 per cent in April to almost £2,000/ five.
Experts say the price cap could hit between £3,000 and £3,400 a year in October when it’s next adjusted.
Chancellor Rishi Sunak in February announced a £9 billion package to help households pay their energy bills, which includes a £150 council tax discount on properties from A to D in the UK.
In November, Sunak set aside £1.7 billion of working capital for Bulb to keep the company afloat until April, after Ofgem concluded it could not pass on its customers to rivals.
But with just three weeks to go before that support expires, industry insiders say it’s particularly difficult for administrators to find Bulb buyers, meaning Sunak is expected to have to provide additional working capital. motion.
A government spokesman said the special manager was obligated to keep the cost of the process “as low as possible”.
Last year, the UK met around 40% of its gas needs from domestic production, but analysts say the proportion could rise slightly this year with projects such as Fields of Elgood and Blythe in the North Sea due to entering the current.
Climate change campaigners say launching new projects will take years and won’t quickly solve the problem of rising household energy bills.
It needs three years on average to produce the first gas from a project after a company has received development consent, according to data from the Petroleum Authority, the North Sea regulator.
