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Offshore Energies UK: Response to HSBC’s decision to end new oil and gas field financing

14 December 2022

HSBC has today published its new Energy Policy outlining its plans “to support the transition to a net zero global energy future.”

The HSBC policy makes clear that continuing oil and gas production will be essential to global energy security but states: “We will no longer provide upstream finance (through lending or capital markets) for the specific purposes of new oil and gas fields and related infrastructure.”

Reuters has covered the story at this link.

Offshore Energies UK (OEUK), which represents 400 companies involved in producing energy from UK waters, in the form of oil, gas and offshore wind, said the UK got 75% of its total energy from oil and gas.

It warned that the declining output from the UK’s existing fields meant continued exploration was vital for the UK’s energy security.

Francesca Bell, OEUK’s senior investor relations advisor, said: “The UK government’s British Energy Security Strategy made clear the need to support the production of North Sea oil and gas, alongside the deployment of offshore wind, solar and hydrogen.

“We support that strategy. At the moment our members produce nearly 40% of the nation’s gas. We can only maintain that kind of output by constant investment. IN the future we want to move to supplying low carbon energy. But that will need investment too. This is a multi-decade project.

“During those decades, energy security will be also key. The Ukraine confict and resulting energy shortages show that ongoing exploration in our waters is critical to ensuring reliable supplies of domestically produced energy in as clean away as possible.

“The key point is that delivering UK energy is expensive – providing energy now and building the low carbon systems of the future will cost billions of pounds a year. That means support from the government and ongoing commitment from banks is essential. We want them to work with us, not against us.

“If financial institutions withdraw support, then the UK’s energy security will be undermined, and the government will struggle to deliver a homegrown transition to cleaner energies.”

Fast Facts

The UK gets three-quarters of its total energy from oil and gas.

  • 24 million (86%) of UK homes rely on gas boilers for heating
  • 1.5 million more homes rely on heating oil
  • 42% of the nation’s electricity comes from gas-fired power stations
  • 32 million vehicles run on petrol or diesel
  • Gas is still the UK’s largest energy source, supplying 43% of total UK energy last year.
  • The UK consumed 76 billion cubic metres (bcm) of gas last year – equivalent to 1,100 cubic metres per person.
  • About 32bcm were imported from Norway and 29bcm were from the UK continental shelf
  • Most of the rest was imported as liquefied natural gas from a mix of countries.
  • Oil is the second largest UK energy source at 32% of total energy
  • The UK’s production of oil and gas fell sharply in 2021.
    1. Oil Production was 45m tonnes
    2. Gas production was 29bn cubic metres of gas
    3. These figures represented a 17% decline on 2020 and a 20% decline on 2019 
  • Imports surged in 2021 when the UK’s net imports were the equivalent of:
    1. 62% of its gas
    2. 18% of its oil
  • Imports will keep rising. By 2030, without additional investment, the UK will have to import around 80% of its gas and 70% of its oil.

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