Rishi Sunak’s plan to boost energy security by issuing new North Sea licences every year has been cast into doubt by claims Britain will be unable to handle the crude oil.
Up to half of the oil produced in the North Sea will be incompatible with UK refineries by 2035, campaigners have warned.
Britain’s refineries are geared up to handle what is known as light oil, rather than heavy crude.
Around 25pc of domestically produced crude oil is already classed as heavy, with this proportion expected to rise to as much as 50pc in the next decade, according to an analysis by Global Witness.
It means Britain will be forced to ship an ever growing proportion of oil from the North Sea abroad unless new refineries are built.
Alice Harrison, of Global Witness, said: “Rishi Sunak’s obsession with oil is a red herring.
“The UK can’t process the oil we produce, and fresh analysis today shows the situation is only getting worse.”
The UK already exports around 80pc of crude it produces, with most going to the Netherlands, Germany, Poland and China, official data shows.
The analysis comes after the Government doubled-down on domestic production of oil and gas, vowing to let companies bid annually for new licences to drill in the North Sea.
On Monday, Claire Coutinho, the Energy Security and Net Zero Secretary, said the move would increase tax receipts and boost the UK’s energy security – but she conceded it would do little to bring down bills.
A government spokesman said: “This is a fundamental misunderstanding of the oil market and completely ignores the fact new oil and gas licenses help us meet our energy needs, while also supporting UK jobs, generating tax revenues and attracting investment.
“Most of our oil goes to EU partners, including Ireland, France and Sweden, to be processed in refineries and made into products the UK needs.
“This supports wider energy security across the continent as well as our own and oil and gas will play an important role in the transition to net zero.”
The North Sea’s reserves have long been in a decline but industry experts say the area’s geology means new drilling is continually needed to ensure a smooth rate of decline rather than a sudden cliff edge.
The Government’s latest proposals are intended to draw a clear dividing line on energy issues with Labour, which has vowed to implement a ban on new oil and gas licences if it wins power.
Industry executives – and ministers – have claimed a complete ban makes little sense because it will simply force the UK to import more oil and gas from abroad, rather than doing anything to tackle underlying demand.
UK refining capacity peaked in the 1970s with about 23 refineries, processing just under 150 million tonnes per year, according to the Energy Institute. It has since declined by more than half.
Today, only six refineries remain in operation. Falling profit margins and increased competition from abroad have made opening new ones commercially unattractive, the Institute said.
A lack of major investment since North Sea production began means refineries generally focus on processing “light” crude, which is easier to turn into products such as petrol.
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