Oil and Gas
Debate between Richard Tice and Martin McCluskey(1 week, 1 day ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“welcomes the Government’s approach to the future of the North Sea, which maintains existing oil and gas fields for their lifetime, as well as introducing Transitional Energy Certificates while accelerating the transition to clean energy; notes that new licences to explore new fields would take many years to come online and would make no difference to energy bills; recognises that oil and gas prices are set on international markets; and further welcomes the measures announced by the Government to go further and faster on national energy security by reducing reliance on volatile fossil fuel markets and expanding secure, home grown clean energy.”
As I have said many times in this House, the North sea oil and gas sector is one of our great industrial success stories. We are proud of the role that the North sea’s workers and communities have played in helping to power our country and the world for decades, and we recognise the role that oil and gas will play in our energy mix for decades to come, as well as the vast skills and experience of our offshore workforce. However, as a Government we also have a duty to be honest about the challenges we face, and the reality is that more domestic oil and gas production will not make us more energy secure and will not take a penny off bills. There is a lot of debate when it comes to this issue, so it is important to focus on the facts.
Martin McCluskey
And on that point—about facts—I will give way to the hon. Gentleman.
Richard Tice
Earlier today, the Secretary of State refused to answer my question about why the price of gas in the United States is between a third and a quarter of the price of gas here in the UK. Perhaps the Minister could help us all and help the British people with that question, which goes to the heart of the price of gas and the size and cost of our bills.
Martin McCluskey
As the hon. Member will know, the price of gas and oil is set on an international market and, as I have said, extracting more from the North sea would not make a penny’s difference to the price in this country.
The North sea is a super-mature basin that accounts for around 0.7% of global oil and gas production. Production has been naturally falling for more than 20 years, which means that our North sea no longer has the reserves available to support domestic energy demand. Crucially, any new licences now would not make any difference to people’s energy bills because, regardless of where it comes from, oil and gas is sold on international markets, where we are price takers, not price makers.
Martin McCluskey
I will say to the right hon. Gentleman what I said to his Front Benchers last week: the Conservatives need to stop talking down the North sea. With 1.1 million barrels a day being extracted, that is not an industry being shut down; that is an industry continuing to produce.
Just last week, the Minister for Energy met our North Sea future board in Aberdeen with representatives from industry, unions and local groups to discuss how we can drive a fair, orderly and prosperous transition. Net zero is the economic opportunity of the century—
Martin McCluskey
That is despite what the hon. Member for Boston and Skegness (Richard Tice) might say. This Government will ensure that our oil and gas workers can take advantage of that opportunity while driving for energy sovereignty and abundance with clean home-grown power.
Oil Refining Sector
Debate between Richard Tice and Martin McCluskey(2 months, 2 weeks ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I thank the hon. Member for Brigg and Immingham (Martin Vickers) for securing this debate. I know that he and other hon. Members, including my hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn), have been engaging closely on this issue with the Minister for Energy, who stands ready to continue to engage with them on the detail.
Let me start with Prax Lindsey oil refinery. It entered insolvency on 30 June 2025 because of the untenable position in which the owners left the refinery, which gave the Government very little time to act. I know how difficult the process has been for the workers, their families and the local community. The insolvency process at the refinery is led by the court-appointed official receiver, who must act independently, in accordance with his statutory duties. Since the insolvency, we have worked with the official receiver to protect workers, and to ensure the safety of the site and the security of fuel supplies. That has also allowed time for bidders to express an interest in the site and its assets.
After a thorough process to identify a buyer for the site, the official receiver has determined that Phillips 66 is the most credible bidder and can provide a viable future for the site. I am glad to say that the sale is expected to complete in the first half of 2026. As many hon. Members will be aware, Phillips 66 is an experienced and credible operator of a Humber refinery, next door to Lindsey. It already supplies fuel to the region and has consistently turned a profit in recent years. The sale allows Phillips 66 to quickly expand operations at its Humber refinery.
The company has decided not to restart stand-alone refinery operations at Lindsey. In its words, not mine,
“Due to the limitations of its scale, facilities, and capabilities, evaluations have shown that the refinery is not viable in current form.”
Although that is disappointing, it is not totally unexpected, given the long history of problems with the business. We understand that the previous owners, Total, sought to sell the refinery for several years and sold it to Prax for a nominal amount. Since Prax’s acquisition in 2021, the refinery has recorded about £75 million of losses. In addition, following a thorough assessment of offers, the official receiver confirmed that no offer was put forward that would credibly see a return to refining operations in the next few years.
Phillips 66 plans to integrate key assets into its Humber refinery operations, expanding its ability to supply fuel to UK customers from the Humber refinery. That is positive news for boosting domestic energy security, securing jobs—including hundreds of new construction jobs over the next five years—and creating future growth opportunities for renewable and traditional fuels. That being said, Ministers in the Department and I recognise that this is a very worrying time for workers, and I am glad to report that the remaining 250 directly employed workers are guaranteed employment until the end of March, although that will be cold comfort to many of them. Phillips 66 will provide further information on the number of jobs that will be retained as it moves towards completion of the sale in coming months. The Minister for Energy has asked Phillips 66 for clarity as soon as possible, and to retain as many jobs as possible. The Government will continue to support the 124 workers affected by redundancy last October.
Richard Tice
The bottom line is that P66 is mothballing the site, and will use certain bits of it for parts, rather than investing in its other site. Will the Minister allow a full, open and transparent look at alternative bids that would have kept the site open, and would have allowed us to keep many more jobs and to retain a strategic national asset?
Martin McCluskey
The hon. Gentleman will know that such discussions are commercially confidential, and the official receiver has undertaken an independent process to come to his decision.
As my hon. Friend the Member for Great Grimsby and Cleethorpes mentioned, the support for the 124 workers affected by redundancy last October includes a training guarantee to ensure that they have the skills that they need, and are supported to find long-term jobs. That goes above and beyond the usual support offered in insolvency situations. I am pleased to confirm that many —the majority—of those workers have already taken up this offer. My hon. Friend the Minister for Energy will be pleased to discuss any issues that my hon. Friend the Member for Great Grimsby and Cleethorpes thinks may emerge to do with the training guarantee.
I believe that the agreement with Phillips 66 marks the next step in securing an industrial future for the site and for the workers, who were badly let down by the former owners. The circumstances surrounding the insolvency are deeply concerning, and that is why the Energy Secretary immediately demanded that the Insolvency Service launch an investigation into the owners’ conduct and the circumstances surrounding the insolvency, which is ongoing.
Turning to issues in the broader UK oil refining sector, the UK’s refineries continue to play a vital role in maintaining reliable supplies of essential fuels that keep transport moving, industry operating and support households with their day-to-day lives. We appreciate that their contribution goes far beyond fuel alone. They are anchors for local economies, providing well-paid, skilled jobs and supporting a wide web of supply chains, which involve everything from chemicals to plastics to advanced manufacturing.
Refinery facilities also enable the production of specialist materials that many of our industries rely on. For example, the Humber refinery produces the UK’s only anode-grade petroleum coke, used in electric vehicle technology, while Fawley’s output of specialised rubber helped to ensure vaccine vials could be produced securely during the pandemic. Crucially, our refineries are also adapting for the future. They are investing in modernisation, low-carbon fuels, and technologies such as carbon capture, which are all essential to the UK’s transition to net zero. The Humber region will have a major role to play in that over the coming years. While overall fuel demand is expected to shift over time, sectors such as aviation, maritime and heavy industry will continue to depend on refined products well into the future. We want to preserve our refining sector and keep it competitive.