Campaigners issue legal challenge to Oil and Gas Authority strategy

Three campaigners have applied to the High Court for a judicial review against the Oil and Gas Authority and Secretary of State for Business, Energy and Industrial Strategy regarding their decision to adopt The Oil and Gas Authority Strategy.

The Oil and Gas Authority (OGA) Strategy came into force in February 2021. It defines what is meant by its legal duty to maximise economic recovery of oil and gas from beneath UK waters. However, the campaigners argue that the definition ignores circumstances where the OGA is only able to maximise this revenue due to subsidies it receives from the UK government. They argue in their legal case that the subsidies, in the form of tax breaks, are not taken into account by the OGA when applying the Strategy to grant licences in the North Sea. This, they say, does not fulfil its legal duty to maximise the revenue from oil and gas extraction.

The OGA Strategy is required under the Petroleum Act 1998 which sets the objective of ensuring that the extraction of oil and gas is cost effective for the UK. By not considering the tax breaks given to oil and gas companies the campaigners argue that the OGA Strategy frustrates the purpose of the Act by allowing the extraction of gas that is economic to the operator but not economic to the UK as a whole.

The campaigners also claim that the OGA Strategy is irrational because it will result in greater oil and gas production than would otherwise be the case, which directly conflicts with the UK government’s legal duty to achieve net zero emissions by 2050.

The OGA strategy requires the industry “to assist the Secretary of State in meeting the net zero target by reducing… greenhouse gas emissions from sources such as flaring and venting and power generation, and supporting carbon capture and storage projects.” However, the campaigners say that because the OGA Strategy will actually lead to more greenhouse gasses being released from the oil and gas that is extracted, as opposed to it being left in the ground, then the Government’s actions cannot be said to be rational.

The campaigners taking the case are: Mikaela Loach, a climate activist and medical student; Kairin van Sweeden, an SNP Common Weal organiser and daughter of a Scottish oil worker; and Jeremy Cox, who previously worked in the downstream oil industry and then as a project management consultant, before retiring.

The three claimants are being supported by Uplift, which in turn is co-ordinating Paid to Pollute, a new campaign supported by a coalition of environmental groups including Greenpeace UK, Friends of the Earth Scotland and 350.org.

Mikeala Loach said:

“Much of the UK’s oil and gas production is only economic because of public handouts. The government is paying companies billions in public money to extract every last drop of oil from the North Sea when it should be focusing on decarbonising the UK economy, meeting its international climate obligations and setting an example to the world as host of the UN Climate Summit in November.”

Kairin van Sweeden said:

“The UK government is wasting public money extracting oil and gas at the expense of our wider economy and our environment. Instead of propping up a declining industry it should be funding a managed phase-out of fossil fuels and a just transition which creates new, green jobs and enables oil industry workers and affected communities in Scotland and the rest of the UK to shape their own future.”

Jeremy Cox said:

“The UK provides more subsidies to the fossil fuel industry than any country in the EU but these massive handouts aren’t creating benefits for oil and gas workers or the public. In fact, as more and more money has flowed to the industry, conditions have only got worse for workers and the UK tax take has declined.”

Rowan Smith, a public law solicitor at Leigh Day, said:

“Our clients’ case is that the OGA’s new strategy encourages companies to produce oil and gas without considering the economic repercussions of that on the public purse and the UK as a whole. This means that, in some circumstances, such production is not “economic” for the UK as a whole, but the OGA is still seeking to maximise it. The case argues that is unlawful, having regard to the terms of the OGA’s legal duty, and also irrational, because it will result in increased levels of oil and gas production, in conflict with the UK’s legal duty to achieve net zero emissions by 2050.”