Sunak’s pledge to grant hundreds of new North sea drilling licences boosts oil and gas stocks

Oil and gas stocks rose on Monday as the Prime Minister promised to grant hundreds of licences in the North Sea.

In a bid to boost Britain’s energy independence, Rishi Sunak said the first new licences would be issued in the autumn.

Two carbon capture projects in Scotland and northern England will also be supported under the new energy initiatives, Sunak said.

The update sent shares flying, with Serica, Harbour, Energean, Tullow and Ithaca making significant gains yesterday.

British Gas-owner Centrica, engineer Weir, energy supplier SSE and power generator Drax also climbed, with the latter being a major beneficiary of the carbon capture programme. 

Oil pledge: In a bid to boost Britain’s energy independence, Prime Minister Rishi Sunak (pictured) promised to grant hundreds of new licenses in the North Sea

Sunak also revealed that the Government would be reviewing the tax regime for these companies, which includes a 35 per cent ‘energy profits levy’ on the profits made from the North Sea, as well as a 40 per cent headline rate of tax.

Although the Treasury has already committed to keeping the tax in place until March 2028 as companies cashed in on Russia’s invasion of Ukraine, ministers have launched a call for evidence seeking views on the ‘evolving context for taxes’ on the sector. 

The windfall tax has been hugely unpopular for the oil sector, which argues that it discourages investment in the UK.

Harbour Energy, the largest oil producer in the North Sea, said its profits last year were ‘all but wiped out’ by the windfall tax.

French giant TotalEnergies has also slashed its North Sea investment plans by £100million for 2023.

London-listed group EnQuest has decided to halt drilling activity at its Kraken oilfield as a result of the levy. 

Trade bodies such as Offshore Energies UK (OEUK) and the International Association of Drilling Contractor have criticised the levy and its impact on UK innovation.

Commenting on yesterday’s announcement, Maxwell Marlow, director of research at think-tank Adam Smith Institute, said: ‘It is right that the Government is seeking to reform this opportunistic tax at a time when it is important for the industry to lead in alternative fuels whilst creating a safe bridge with less-polluting natural gas.’

Andy Mayer, energy analyst at the Institute of Economic Affairs, said: ‘The Government’s commitment to ‘max out’ North Sea oil and gas production is a welcome step towards energy security.

‘But the announcement of licences for largely already committed projects will do little to encourage future investors frightened away by windfall taxes and the militant net zero consensus in Parliament.’

Serica surged 6.8 per cent, Harbour rose 5.4 per cent, Energean gained 3.4 per cent, Tullow grew by 3.7 per cent and Ithaca added yesterday. Meanwhile,

Centrica increased by 2.9 per cent, Weir lifted 2.5 per cent, SSE inched up 0.8 per cent and Drax edged higher by 1.1 per cent.

This post first appeared on Dailymail.co.uk