Why BP and the opposite oil giants ought to defy Labour’s inexperienced lunacy – and provides Britain the ability up it wants

Britain’s climate change activists may think they have gained the upper hand in the battle against fossil fuels.

But the conflicts in the Middle East and Ukraine have underlined the importance to all our lives of energy security.

BP, which posted its lowest quarterly profits for almost four years yesterday due to lower oil prices, is a company at the heart of the conflict.

Under previous boss, Bernard Looney, the direction of travel was firmly away from fossil fuels with ambitious targets to cut oil and gas production.

But his replacement, Murray Auchincloss, has been under pressure to re-think. His decisions are hugely consequential for BP shareholders and for UK plc.

BP is showing signs of taking on the green campaigners and politicians such as Energy Minister Ed Miliband, whose obsession with banning fossil fuels is doing great harm to this country.

The oil giant is also confronting the lobbyists and zealots who shame and smear British institutions on the basis of their links to energy companies.

In December last year, to the fury of eco-warriors, it signed a £50million sponsorship deal with the British Museum.

This was despite the fact that only months earlier, it was revealed that BP had been forced to abandon supporting the museum after 27 years.

That followed a relentless campaign of demonstrations by the green lobby against the blue-chip energy company.

What is striking is that the British Museum appears to have had a change of heart in welcoming back its old sponsor.

Wokery is all very well – until it starts costing you tens of millions of pounds in support.

Eco-campaigners have forced any number of cultural bodies to cut ties to their fossil-fuel sponsors.

The Tate, National Portrait Gallery, Royal Shakespeare Company, Scottish Ballet and Royal Opera House have all ended funding partnerships of many decades with BP in recent years, having buckled under the pressure.

The National Gallery parted company with rival oil major Shell, as did the London-based arts complex the Southbank Centre and the British Film Institute.

In the City, the oil giants have also been shunned, with some asset managers excluding them from our pension funds. This is despite the fact that they are among Britain’s biggest payers of dividends to investors, and of taxes to HMRC.

But the mood is finally changing. And it is the war in Ukraine and the escalating conflict in the Middle East that have helped to catalyse this change.

They have forced the West to acknowledge how fragile our energy supplies are, and how there is no prospect of renewables replacing them in the near future.

And so energy companies like BP are going back to basics all over the world.

Except, that is, in Britain’s coastal waters. They are still rich in oil and gas, but the Labour government’s bone-headed refusal to grant new North Sea oil licences means the wealth of opportunity they offer has been cast into darkness.

Miliband has slammed the door on new North Sea oil exploration. New drilling has been jettisoned for a green agenda of wind and solar, which can never meet our energy needs and will scar the landscape. 

Proposed new taxes on existing North Sea oilfields are a hammer blow to the UK’s refining and engineering skills. In a worst-case scenario, the industry reckons up to 100,000 jobs could be in jeopardy.

Labour’s claim that its launch of publicly owned Great British Energy can fill the gap, with new manufacturing jobs in renewables, is the stuff of fantasy.

Denmark is the global leader in sourcing and manufacturing wind farm technology. The panels for solar farms and our homes are largely made cheaply in China. The heat pumps Labour wants us to buy to replace gas boilers are mainly imported from Germany.

The harm done by Labour’s green zealotry has become clear even in the short time it has been in office.

Thousands of job losses have been announced as a result of the closure of coal-fired steel blast furnaces in Port Talbot.

A new greener electric arc furnace will not be up and running for several years. Sir Jim Ratcliffe’s Ineos company, meanwhile, has decided that oil refining at Grangemouth is no longer economic. The list goes on.

The lunacy of Labour’s approach is that it is so short-term. The big oil companies are happy to get behind the renewables revolution.

However, the best way to do so is to maximise earnings now, so that they can invest more in a green energy development for the future.

Under Looney, the energy giant set itself an ambition of transforming itself into a greener company by 2030, sacrificing earnings and dividends.

Following his departure a year ago, his successor, Canadian born Auchincloss, reverted to exploration and production.

And predictably, given the hopeless prospects for fossil fuel development in the UK, it is looking elsewhere.

There are three new projects in Iraq, new plans in Kuwait and a return to the Gulf of Mexico – scene of the Deepwater Horizon disaster in 2010 – where the company is to develop a large and complex oil reservoir. 

Onshore in the US it is expanding in the Permian Basin in Texas where fracking has transformed America’s energy prospects, turning it into the planet’s biggest natural gas exporter.

BP is far from alone in recognising that the route to a greener energy future is to double down on drilling for oil and gas, building big strategic reserves.

Cash flows from oil, if used wisely, can support the renewables revolution.

No one frowns at Norway’s continued pumping of oil and gas, and it is among our biggest energy suppliers via the Langeled pipeline.

Norway, already among Britain’s largest overseas investors, recently announced that its state-controlled oil and gas company Equinor has bought a 10 per cent stake in Denmark’s massive energy company Orsted.

Equinor operates vast offshore wind farms off England’s East Coast and recently was a winner in the latest UK licence round.

There can be no better example of how the fossil fuel companies are creating the financial resources which, over time, are allowing the green energy revolution to take place.

In the United States, the presence of climate-change experts on the board of Exxon-Mobil has not prevented the company doubling down on its exposure to oil.

Earlier this year it spent £46billion buying Pioneer Oil in Texas, one of America’s biggest beneficiaries from the fracking revolution.

Also in the US, Warren Buffett, the world’s most famous investor, showed no reticence in snapping up a big stake on Occidental oil.

Even the woke campuses are changing their views.

Princeton University in New Jersey has just reversed a policy that constrained the funding of academic research by fossil fuel companies, saying the rule was hindering research on environmental challenges.

The fact is, this Labour government is appearing more and more out of step with the world over fossil fuels.

And the dangers of making ‘Big Oil’ unwelcome here are manifest.

Wael Sawan, the chief executive of the Anglo-Dutch giant Shell, has cautioned that hostility in the UK to oil exploration has led him to consider moving the company’s share listing from London to New York.

As one of the two largest corporations in Britain, Shell’s departure would be an unmitigated disaster to the City of London and the nation’s tax base.

In 2023 it contributed £51billion to governments worldwide – including much in the UK – in the shape of corporation taxes, royalties, excise duties and other levies. That’s more than double Labour’s £22billion so-called black hole.

Last month it was revealed that more than 50pc of Britain’s energy now comes from renewable resources.

The path to a less carbon emitting future is being laid. But it makes no sense to demonise our big oil companies with windfall taxes and other taxes and drive them offshore.

It undermines the nation’s security (making us dependent on overseas imports) and could deprive Britain of the dividends and earnings which can help fuel a less disruptive transition.