Andy Burnham's Energy Strategy: A New Era for North Sea Oil and Gas?

New Delhi, India Jul 19, 2026 ALN: The final weekend before Andy Burnham enters Downing Street is being dominated by suggestions he'll announce plans for new drilling in the North Sea.

On Saturday, the BBC reported the incoming prime minister would stick to the party's 2024 manifesto pledge to issue no new oil and gas licences but would honour existing ones. This commitment reflects Labour's broader strategy of balancing energy needs with climate commitments, a challenge that has defined energy policy debates in recent years.

That line has been confirmed as the hours count down to the Burnham premiership. Speaking on Sunday with Laura Kuenssberg, Labour's deputy leader Lucy Powell stated that Burnham would adhere to the party's manifesto commitments, but there would be a "change of emphasis" on North Sea oil and gas. This indicates a potential shift in how Labour plans to navigate the complexities of energy production and climate change, especially in light of the ongoing global energy crisis.

"We've been really clear that the way to achieve in the long term energy security and lower bills is by ensuring that we do have our own homegrown, clean, much cheaper energy," she said. "But we've been absolutely clear that North Sea gas and oil is an important part of that transition. It's an important part of the mix, and I think what Andy's talking about is taking a more pragmatic approach and working with the industry to make sure that it can contribute to that [energy] transition and to the mix that is needed over the long term." This pragmatic approach suggests that Burnham may seek to balance immediate energy needs with long-term sustainability goals, a delicate balancing act in the current political climate.

Just how all this is squared up will, hopefully, become clear in the coming days and weeks. There is one thing we can be confident about now - the new prime minister won't be confirming approval for the controversial Rosebank and Jackdaw fields on day one in the job. The operators of those fields were given the go-ahead by the previous Conservative government, but those decisions are having to be reconsidered because of a successful legal challenge. al groups Greenpeace and Uplift argued that ministers had not considered the full climate impact from burning fossil fuels which the fields would produce, highlighting the ongoing tension between energy development and al protection.

Despite both sites having production facilities in place, a lengthy process is still underway by the Offshore Petroleum Regulator for and Decommissioning (Opred). That is now in its final stages. Both applications are subject to consultations which close in August, and jumping the gun on those would certainly land the government back in court. This situation illustrates the complex regulatory landscape that Burnham will need to navigate as he assumes office, as well as the heightened scrutiny on fossil fuel projects amid growing climate concerns.

But while those two decisions are the most pressing and arguably most controversial in Burnham's energy in-tray, there are plenty of other matters he's going to have to take a view on. The next biggest relates to oil and gas exploration licences. These give operators the exclusive right to explore for hydrocarbon deposits within an area of sea known as a "block." Labour's 2024 election manifesto pledged to ban new licences, and that promise was carried out by Energy Secretary Ed Miliband soon after Labour came to power. This ban reflects a growing recognition of the need to transition away from fossil fuels, yet it also raises questions about energy security and economic stability.

The government has already agreed to a significant concession by allowing "tie-backs" - production in unlicensed areas which are close by and connected to infrastructure in already licensed areas. This concession allows for continued extraction without issuing new licenses, thus dancing around the manifesto commitment but, strictly speaking, does not break it. Anything further certainly would. This approach underscores the complexity of energy policy, where the government must balance immediate economic benefits with long-term sustainability goals.

There's also no great desire within the oil and gas industry for full licences to explore totally unknown areas of seabed. These require huge amounts of capital investment and are a big gamble. Over recent decades, the oil supermajors like BP, Shell, and TotalEnergies have been selling off their assets to smaller operators whose pockets are not as deep. Their mission is not to explore but to extract what's left in known fields. This trend reflects a broader shift in the industry, where established companies are focusing on maximizing returns from existing assets rather than taking on the risks associated with new explorations.

Other options for Burnham include scrapping the Energy Profits Levy (EPL), or windfall tax. This was introduced when prices spiked at the start of Russia's invasion of Ukraine. It has a headline rate of 78%, which is taken whether oil and gas prices are high or low. The industry claims that this makes the North Sea one of the least favourable s in the world for investors, and there is strong evidence that investment has certainly dried up in those years. This situation poses a significant challenge for Burnham, as he will need to weigh the potential benefits of reducing the tax burden on the industry against the need for public revenue and the government's climate commitments.

It's due to be replaced in 2030 by another windfall tax, which operators like more because it's only triggered when prices are high and falls back when they are low. While politicians have been arguing furiously over Jackdaw, Rosebank, and new exploration licences, it's the EPL which the industry would most like the new prime minister to focus on. It’s also the one which is likely to face the least opposition from alists. This aspect of energy policy demonstrates the intricate dynamics at play, as Burnham will need to navigate the interests of various stakeholders, including the oil and gas industry, al groups, and the public.

It does fit in with one of Andy Burnham's missions of reindustrialisation by encouraging the kind of investment that brings and secures jobs. However, it's the least politically sexy option to take. So what he does there may help define whether the new PM is about grabbing headlines or making genuine moves to stimulate the economy. The implications of Burnham's decisions will extend beyond the immediate energy landscape; they will also shape the UK's long-term energy strategy, influence public perception of Labour's commitment to climate action, and determine the nation's role in the global energy market as it transitions to a more sustainable future.