A new independent study suggests that the UK could produce up to 7.5 billion barrels of oil and gas from its North Sea waters—3.2 billion more than current government forecasts, which predict production of fewer than 4 billion barrels. This figure could potentially meet about half of the UK's projected demand of 13 to 15 billion barrels by 2050, as estimated by advisory bodies such as the Climate Change Committee. The study, led by Offshore Energies UK (OEUK), highlights the significant economic and strategic benefits of maintaining and increasing domestic production, including a potential £165 billion boost to the economy and the protection of around 200,000 jobs.

Despite this potential, the UK's offshore energy production has fallen to record lows. In 2024, the country imported more than 40% of its total energy needs amid a natural decline in the North Sea basin. With over 280 active oil and gas fields currently in operation, predictions indicate that 180 of those could cease production by 2030. This decline has prompted concerns that, without government support, the UK could become increasingly dependent on imports for up to 80% of its oil and gas requirements within the next decade. Industry leaders argue that current policies, including high windfall taxes and uncertainties about future licensing, are accelerating this decline, rather than underlying geology.

David Whitehouse, chief executive of OEUK, emphasises that the challenge is not about choosing between oil, gas, and renewable energy but about maximising homegrown resources to reduce reliance on imports. Speaking at an industry event, he noted, "In an increasingly volatile world, if we act now, the UK can meet more of its oil, gas and renewables needs from homegrown resources – we need it all." He points to examples like Norway and New Zealand, where governments support continued oil and gas production alongside renewable energy development, helping to secure energy supplies and economic stability.

The East of England Energy Group echoes these sentiments, stressing the continued critical role of gas in the UK’s energy mix, particularly in regions like East Anglia. Kevin Keable, chairman of the group, remarked that despite the rapid growth of renewable energy sources, gas remains vital for electricity generation, heating, and cooking. He also highlighted the growing demand for electricity driven by technological developments such as data storage and AI, which places additional pressure on the UK’s energy infrastructure.

However, the context of investment is concerning. Over 90% of offshore energy firms are reported to be reducing investment due to high taxes, political uncertainty, and inflation, with some major operators' revenues forecasted to plunge dramatically by the end of the decade. This investment decline threatens the long-term sustainability of the industry and the economic benefits associated with it.

The UK government has recognised the importance of the North Sea in its clean energy future, launching consultations aimed at boosting private investment in technologies that reduce carbon emissions and increase energy security. Nonetheless, balancing the natural decline of oil and gas with ambitious net-zero targets remains an ongoing policy challenge, requiring delicate management to support both the economy and climate commitments.

The industry’s call is clear: continued support for offshore oil and gas production, coupled with reforms to taxation and licensing policies, could unlock significant economic value while ensuring energy resilience as the UK transitions to a cleaner energy system.

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Source: Noah Wire Services