NORTH Sea oil and gas firms received a boost amid challenging times for the sector after environmentalists suffered a setback in their attempt to get Government support for the industry deemed unlawful.

Campaigners launched a landmark High Court action last year against the Oil and Gas Authority and business secretary Kwasi Kwarteng on the grounds that the official drive to maximise North Sea production is both unlawful and irrational.

They claimed the policy of maximising economic recovery (MER) of the North Sea’s reserves promoted by the OGA is unlawful because it fails to take account of the billions of pounds of public money used to support the industry. This means the resulting production is not economic for the UK.

The three campaigners claim the policy is irrational because it will result in increased oil and gas production, in conflict with the UK’s legal duty to achieve net zero emissions by 2050.

The Herald: Climate activist Mikaela Loach Picture: Paid to PolluteClimate activist Mikaela Loach Picture: Paid to Pollute

However, Mrs Justice Cockerill said the claimants’ action failed on both counts.

The judgement was welcomed by trade body OGUK following a period in which the industry has come under sustained attack from campaigners amid concerns about the role that fossil fuel use plays in stoking climate change.

Last month Shell dopped plans to develop the giant Cambo find West of Shetland after these provoked fierce opposition from environmentalists.

READ MORE: Shell boss defends Cambo plan and declares North Sea is 'outstanding' basin

OGUK chief executive Deirdre Michie said of the High Court judgement: “We hope this decision strengthens investment confidence in the UK basin at a time when we need to prioritise domestic energy production while delivering a lower carbon energy future.”

She added: “ Our companies are adapting their 50 years of energy expertise to accelerate crucial green technologies like hydrogen, carbon capture and wind.”

The Herald: OGUK chief executive Deirdre Michie Picture: OGUKOGUK chief executive Deirdre Michie Picture: OGUK

In response to Mrs Justice Cockerill’s judgement, the OGA said: “We remain firmly focused on regulating and influencing the oil, gas and carbon storage industries to both secure energy supply and support the transition to net zero.”

Success for the campaigners in the High Court action could have had serious implications for the industry amid the fallout from the pandemic. Firms cut spending in response to the plunge in oil and gas prices triggered by the spread of the coronavirus.

READ MORE: North Sea oil firm to cut more than 500 jobs

However, the campaigners said they may appeal against yesterday’s judgement. They reiterated their view that the Government should not provide any financial support for the industry at a time when some firms are making big profits amid what they describe as a climate eemrgency.

The three campaigners include a member of the Scottish National Party Common Weal group, Kairin van Sweeden. The others are Mikaela Loach, a climate activist who is a medical student at the University of Edinburgh, and former refinery worker Jeremy Cox.

The claimants are being supported by Uplift, which is co-ordinating the Paid to Pollute campaign launched by environmental groups such as Greenpeace UK and Friends of the Earth Scotland.

Last year the OGA adopted a revised strategy which it said reflected the ongoing energy transition.

The claimants argued the OGA strategy is wrong because projects are assessed without taking account of expected tax flows, which can be negative.

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In her judgement Mrs Justice Cockerill observed: “The complaint is essentially this: that I should conclude that the approach to the Strategy is wrong because it is possible there may in individual cases be net payments to particular companies in particular years.”

However, she added:  “Whilst in any given year a particular company may receive a rebate, it will never receive more by way of rebate than has been paid by way of tax.”

The judgement also noted the potential for the MER strategy to deliver wider economic benefits, besides generating tax income.

Regarding the claims that the OGA strategy is irrational in net zero terms, Mrs Justice Cockerill observed: “The Claimants’ argument oversimplifies the Strategy and the OGA’s economic assessment to the point of misunderstanding it.”

She noted the strategy requires relevant persons to maximise the expected net value of economically recoverable petroleum rather than the volume expected to be produced.

Mrs Justice Cockerill added: “The Claimants’ approach also entirely fails to grapple with the changes to reflect the move to net zero. Carbon costs have now been brought within the assessment of economic recovery.”