Energy security will still have ‘major impact on oil and gas’ in 2023

As we approach the first anniversary of Russia’s invasion of Ukraine, it is a further reminder that energy security will continue to have a major impact on oil and gas markets and how nations meet their energy requirements.

Fiscal stability is paramount if international investors are to be persuaded to commit to the UK energy sector and so help improve our energy security.

The government has to recognise that when prioritising future investments, decision makers are horizon scanning over the next 10-15-20 years, therefore perceived instability weakens the appeal of both renewables and hydrocarbon projects.

There is widespread recognition that oil and gas extracted from the UKCS basin needs to be recovered in a responsible and accountable manner, with environmental concerns being front and centre.

It is accepted there should be some contribution from the industry but there is a careful balance to be struck when creating a long-term sustainable energy policy.

Renewables will in time become the dominant source of our energy output, but oil and gas need to be at the heart of any policy until that stage is reached, and encouraging responsible long-term investment in both sectors is an important consideration for policy makers.

Despite some of the economic headwinds and volatility the sector faced in 2022, there remains a good appetite to invest in oil and gas and a broader range of funds are coming back into the fold because of three factors – the importance of establishing energy security; the industry appears to be addressing ESG concerns; and the potential returns are much more positive now compared to many other sectors.

In the last decade, Ithaca Energy has deployed an excellent ‘buy and build’ strategy, making a number of well-considered, transformational acquisitions to become one of the leading operators in the UKCS basin.

Pinsent Masons has advised Ithaca throughout this period, including its recent listing on the main London Stock Exchange.

The largest UK IPO of 2022, this listing not only underlined the market confidence in Ithaca’s innovative management team but illustrates that institutional investors are coming back into oil and gas and that the capital markets are selectively open for quality businesses.