Starmer eases sanctions on Russian oil despite calls to ramp up North Sea drilling
Keir Starmer is to allow Russian imports of diesel and jet fuel in a major softening of what has been a hardline stance towards Russia since its invasion of Ukraine in 2022.
A licence issued on Wednesday will allow such products to enter the UK “indefinitely”, as long as the oil has been refined in other countries.
The decision comes amid surging jet fuel and diesel prices off the back of the conflict in the Middle East and the blockade of the Strait of Hormuz, which has choked roughly 20 per cent of the global oil supply.
But fears have grown that Starmer’s decision to lift restrictions could boost the Russian war economy, with the UK warning the US that their decision to issue exemptions to the country in March could fuel Putin’s “war machine”.
Britain previously announced that it would block Russian oil refined in other countries to further restrict funds to the Kremlin, but the new licence confirms that exemptions will be made if “the products have been made in a third country”.
A separate licence issued by the Department for Business and Trade will also permit the sea transport of Russian liquefied natural gas (LNG).
LNG can now be delivered and transported by ship from Sakhalin-2 and Yamal, two terminals in Russia.
Kemi Badenoch, the Tory leader, led the backlash on Starmer’s decision.
In a post on X, she said: “After 18 months of ‘standing up to Putin’, the Labour Government quietly issued a licence allowing imports of Russian oil refined in third countries.
“Yesterday, Labour MPs voted against UK oil and gas licences. We are now importing from Russia instead of drilling in the North Sea. Insane.”
Boost North Sea drilling
Starmer’s decision also comes after the boss of one of the UK’s biggest oil giants called on the government to kickstart drilling in the North Sea, claiming it would grant the economy a needed boost and enhance both energy and national security.
Wael Sawan, chief executive of Shell, called for energy secretary Ed Miliband to approve two key oil and gas fields, both of which Shell has a stake in through a joint venture, arguing the schemes would “create jobs” that in turn “create taxes”.
He also argued having “homegrown resources” would boost national security, claiming it was more ideal that getting energy through imports.
His comments to The Telegraph follow months of uncertainty regarding both the Jackdaw gas field in the North Sea and the Rosebank oil field off Shetland, which are two of the biggest untouched reserves in UK waters.
Jackdaw and Rosebank
Shell and Equinor’s, a Norwegian energy company, joint venture Adura has been waiting for Miliband to make a decision about the site, after the court referred the projects to the energy secretary, following a legal battle between developers and green groups over emissions.
Adura was created by the two companies to combine their UK offshore oil and gas assets, and operates fields including Mariner and Buzzard.
The venture has been left in limbo, after Miliband described such schemes as “climate vandalism” while in opposition, with his office having delayed a decision regarding the sites for months, despite claims approving the projects could help ease pressures caused by the Iran war.
Sawan claimed the Jackdaw field has the “opportunity to bring gas that is home-grown to the UK before the end of the year”, claiming it is a “real opportunity”.
He said: “If the UK grasps this, it assures a volume of resources coming from a secure field here in the UK”.
The boss of the FTSE 100 stalwart also claimed Rosebank would similarly allow the UK to bolster its resources, saying “Shell is a partner” that can help the government develop oil resources.
North Sea tensions
But tensions over the future of the North Sea are growing, with the energy secretary facing down challenges in the Commons on Tuesday over his plan to block new licences for exploring new oil and gas fields in Britain.
The King’s Speech included new legislation last week that would introduce a legal prohibition on new drilling, making Miliband’s challenge permanent.
The Conservative’s attempt to table an amendment on the legislation was thrown out of the Commons on Tuesday.
Both the Jackdaw and Rosebank fields do not fall under the temporary suspension on new drilling.
Sawan went on to claim the global oil shortage caused by the conflict will worsen in the coming months, with the closure of the strait likely to damage “crude supply” and other products such as jet fuel and petrol.
But he admitted Shell is likely to continue to profit off the crisis, with the company having lost production in Qatar, equivalent to “roughly 300,000 barrels of oil per day”.
The loss represents around 10 per cent of its overall production according to Sawan, with commodity prices rising sharply in recent months.
He said: “We’ll see where the results land by the next quarterly results, but I won’t speculate on what those numbers look like.
Shell’s share price has jumped 19.1 per cent since January, trading at 3,287.5p, and reporting earnings of $6.9bn (£5bn) in the first quarter of the financial year.
Its upstream segment, which covers crude oil, natural gas and natural gas liquids, delivered a $1.2bn jump in the first quarter, taking earnings to $2.4bn. This was up from $1.6bn in the previous quarter.