Russian Oil Import Ban

With permission, I would like to make a statement on the UK’s phase-out of imports of Russian oil in response to Vladimir Putin’s brutal and illegal invasion of Ukraine.

First, I want to say what a privilege it was for all of us to hear President Zelensky’s historic address to the House yesterday. I am sure that all Members will join me in thanking him once again for his inspiring words and great leadership. It is with those words in mind that I come here today.

The UK joins key allies, including the United States, in halting the import of Russian oil, which makes up 44% of Russian exports and 17% of the Russian Government’s revenue through taxation. This action follows the most punishing set of sanctions that the British state has ever imposed on a G20 nation. Our trade, financial and personal sanctions are having an effect on the Russian economy. As I speak, the rouble has now fallen by nearly 42%, and the Moscow Exchange’s stock trading has been shut since 25 February. The British Government have sent a clear message to Putin’s regime and to those who support him in his war against Ukraine.

It is important to remember that Russia produces only a fraction of the fuel products currently imported in the UK. In a competitive global market for oil and petroleum products, demand can be met by alternative sources of supply. As a result of international revulsion at Putin’s invasion, Russian oil is already being excluded from much of the market, and currently it is trading at quite a sharp discount from other crude oil sources.

We want to go further. Yesterday I set out that the UK will be phasing out imports of Russian oil during the course of the year. This transition will give the market, businesses and supply chains more than enough time to substitute Russian imports. Businesses should use this year to ensure as smooth a transition as possible, so that consumers will not be affected. The Government will work with companies through a new taskforce on oil to support them to make use of this period in finding alternative suppliers. Yesterday I spoke with businesses, unions and representatives from the sector, and of course I and officials in the Department for Business, Energy and Industrial Strategy will continue to engage with and support British business.

Although Russian imports account for 8% of total UK oil demand, we should remember that the UK is a significant producer of crude oil and petroleum products. We participate in a global market for those products and we have resources in place in the unlikely event of supply disruption. Over the course of the year, the taskforce that we have set up will work closely with international partners, including the USA, the Netherlands and the Gulf to ensure alternative supplies of fuel products. Last week I addressed the International Energy Agency and tomorrow we will have an extraordinary meeting of the G7 Energy Ministers to discuss further steps.

Although businesses should do everything they can to secure oil from alternative sources, it is important to emphasise that they will still be able to import Russian oil during this transition period. These measures target oil-related products imports only. The UK is not dependent on Russian natural gas, which makes up less than 4% of our supply. However, I will be exploring options to end that altogether.

I want to make it clear to the House that we must end our dependency on all Russian hydrocarbons. In the meantime, we need more investment in North sea oil and gas production as we make the move to cheaper, cleaner power. Turning off domestic production at this moment, as some are calling for, would be completely the wrong thing to do. We are not going to do that. The Prime Minister has also confirmed that the Government will set out an energy strategy to explain the UK’s long-term plans for greater energy security, including renewable and nuclear power, building on our 10-point plan.

This measure to phase out Russian oil, and those being taken by our allies, will move the west away from dependency on Russian oil. It will take us on a road to building a stronger and more resilient British energy system. It will increase the growing pressure on Russia’s economy and, ultimately, hamper Russia’s ability to impose further misery on the Ukrainian people.

I thank the Secretary of State for his statement. We are united against Russian aggression. We stand together in solidarity with the Ukrainian people. Let me echo his admiration for President Zelensky, whose bravery and eloquence yesterday were extraordinary and inspiring.

On the Secretary of State’s immediate decisions, we know that Putin’s war machine is being funded by oil and gas, which is why it is right that every country does what it can to isolate the regime, and that every company does so too. We fully support the Government’s decision to ban oil imports, which is a welcome step. It is also right to work with companies and unions on how we implement that policy. What assessment has he made of the impact of the ban on petrol and diesel prices?

We also support the Secretary of State’s decision to seek ways of ridding ourselves of Russian gas imports. On the wider energy security context, it is essential that we learn the right lessons from this crisis. Although 50% of our gas comes from the North sea and only 4% from Russia, we pay the same price for our own gas as for that which we import because we operate in an integrated gas market, so we are absolutely exposed to these rocketing wholesale gas prices, which are currently up 100% on the month and 800% on the year.

Therefore, the right lesson to learn is surely that we have to go much further and faster in developing home-grown zero-carbon power, including renewables and nuclear, which can free us from the whims of autocrats and dictators who can use fossil fuels as a geopolitical weapon. Does the Secretary of State agree this is the right lesson and that policy will need to change? In particular, does he agree that we should finally end the effective moratorium on onshore wind in the planning regulations, which since 2015 has denied us power each and every year equivalent to our gas imports from Russia? Does he agree that we should ramp up our offshore wind so we go well beyond 40 GW, and that it is time to finally get serious about energy efficiency—the best way of cutting energy demand and an area in which the Government have not succeeded in past years?

In his customary way, the right hon. Gentleman raised a large number of questions, the majority of which I hope to deal with. He spoke against Putin’s barbaric invasion and completely illegal actions. I am very pleased that he reflects our sentiments and that we have a mutual interest in making sure that Putin fails.

As far as the cost of living is concerned, the Chancellor of the Exchequer has made an extensive intervention, and it is wrong for Opposition politicians to say that the price cap that will be set in August will necessarily be higher than it is today. We simply do not know. As the right hon. Gentleman understands, the price cap will be set retrospectively, looking at the average price. It may well be higher, but there are circumstances in which it will not increase as much as he imagines. As is always the case, we take an ongoing approach to looking at the price cap. We speak to Ofgem all the time and Ofgem is engaged in work on how the price cap is calculated.

I am pleased to hear that the right hon. Gentleman is keen to support investment in the North sea, making sure that gas is a key transition fuel, something that many people on the Opposition Benches may disagree with. He is right to stress an increased focus on renewables and nuclear power—we are absolutely at one in our agreement on that.

I welcome my right hon. Friend’s statement. We have to brace ourselves for the greatest impact on living standards that any of us has known in our lifetime, which necessitates a more pragmatic approach to energy policy. It means accelerating investment in renewables, potentially lifting the effective moratorium on onshore wind, looking again at fracking and taking all possible advantage of our domestic supplies in the North sea as part of a transition. Does my right hon. Friend agree with that, and also that it would be perverse and dangerous to take away oil from Russia and replace it with oil and gas from Iran and Venezuela, two regimes that are just as malign and dangerous as Putin’s in Russia?

My right hon. Friend is absolutely right: we have to look at all the possible technologies that can give us as much resilience as possible. We have to shrug off a lot of outdated dogma in this area, and I am pleased that the right hon. Member for Doncaster North (Edward Miliband) is full square behind nuclear, because as I remember, when he was Secretary of State, he was not the most supportive of the nuclear industry. My right hon. Friend is right to identify potentially hostile powers and we are keen to diversify away from providing resources to those powers.

I think it is safe to say that we in this Chamber all broadly support the statement that the Secretary of State has made and, while there will be arguments about the potential speed of the transition, we cannot escape the sheer scale of what has been announced today. This is a seismic shift in UK, US and indeed European energy policy. However, we also cannot be blind to the fact that there will be consequences and one of the potential consequences is retaliatory action from Putin himself. What consideration has the Secretary of State given to that matter?

On that point, if there were to be gas and oil shortages on the European continent, as a producer of oil and gas, would that not emphasise the importance of Scotland’s North sea oil and gas reserves? In terms of resources and Scotland’s resources in particular, the renewable resources that Scotland has are enormous: 25% of Europe’s entire offshore wind capacity sits off the coast of Scotland. I was a bit disappointed that the Secretary of State did not say more about renewables, so I would like to hear a little more from him about the additional support he intends to give to onshore and offshore wind, tidal, hydro pump storage, hydrogen and so on and so forth, and what the timescales for that progress will be.

Of course, the second big consequence will be for consumers. We cannot escape that fact: there will be inevitable price rises, irrespective of what the Secretary of State intimated about the price cap. Will he commit to using every single penny of additional resource that comes from the North sea oil and gas sector to insulate households from the looming cost of living crisis?

I was very determined not to inject any kind of partisan tone into these proceedings, but it struck me as particularly bizarre to hear the hon. Gentleman defend our North sea transition deal and the considerable oil and gas assets in Scotland. I would be very interested to hear what his Green counterparts in the coalition north of the border thought of his remarks.

In relation to protecting consumers, the hon. Gentleman will know that we are fully committed to the price cap, and review it all the time to determine how effectively it can operate. Of course, we are 100% behind renewables. Regarding onshore wind, it is important to remind the House that we lifted the ban on the pot one auction last year, which has led to a huge boost for onshore wind.

I thank my right hon. Friend for his statement and very much welcome the overall emphasis on replacing fossil fuels with renewables in the longer term. However, does his Department understand the urgency of the present short-term situation for not just prices, but security of supply? The Government have announced support for households, but what about businesses? Businesses tend to buy on six-month contracts and his hope that the situation will rectify itself within a few months is, I am afraid, hopelessly naive. We are facing a crisis in energy bigger than the oil price shock of the 1970s and it is likely to have as big an impact, or a bigger impact, on our economy than that had on our economy then. Is his Department seriously engaged with this situation with the necessary urgency?

We are absolutely engaged with that. As someone who is very interested in the 1970s, my hon. Friend will remember that the oil price quadrupled in three months. We are facing a difficult time. The Department is fully aware of the urgency of the problem, but he will appreciate that a lot of the investment that we needed to make simply was not made. We did not make enough commitment to nuclear—that was a historical mistake of previous Governments—but we are focusing on dealing with the problem in the here and now, and that is why my right hon. Friend the Prime Minister and I are coming up with a plan in the next few days to track—[Interruption.] I find it extraordinary that the right hon. Member for Doncaster North (Edward Miliband), who was responsible for energy policy in the last Labour Government, is smirking from a sedentary position, when he comprehensively failed the nuclear sector, completely failed on energy supply and completely failed on energy resilience. We are still trying to clean up his mess. I say to my hon. Friend that we are working on these plans.

We will have no more interventions from a so-called sedentary position.

I thank the Secretary of State for advance sight of his statement. He will know that many local authorities, NHS trusts and other public bodies are locked into gas supply contracts with Gazprom. To get out of them, the Government need to bring forward legislation to amend the public procurement rules. Will he do so?

The position in respect of Gazprom is that the UK company is separate from the parent but, should anything happen to Gazprom, just as with any other supplier of energy, we will take the appropriate steps.

When we sanction Russia, we also sanction ourselves. We need to be clear with the British people, do we not, that this is a sacrifice we are expecting them to make, when the Ukrainians are making so much greater sacrifice.

My right hon. Friend is absolutely right. People in this country have an intuitive, heartfelt feeling for the people of Ukraine. People understand—I have seen it in my constituency at the weekend and I am sure he has seen it in his—and are willing to endure hardships in solidarity with the heroic efforts that the people of Ukraine are making. People understand that in this country, because we are a generous and giving country.

The Government are right to get off Russian oil and gas—I welcome that—but wrong to propose replacing it with new domestic production. Our dependence on fossil fuels is what got us into this energy crisis in the first place, and that is why many of us, including the International Energy Agency, are calling for no new licences. The real insanity is trying to get out of one crisis by plunging ourselves into another. More extraction from the North sea will keep our bills high and drive us past safe climate limits, and fracking will not help. Will the Secretary of State use this moment to launch an emergency green revolution? Will he get serious at last about energy efficiency, and will he wean the UK off not just Russian oil and gas, but all oil and gas now?