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The UK’s offshore energy sector has issued a strong appeal for immediate action to boost domestic oil and gas production, urging the government to ease restrictions on exploration in the North Sea. Offshore Energies UK (OEUK) has warned that without increased local output, the nation faces heightened dependence on imports amid escalating global instability. This concern comes at a time when oil and gas prices have surged, particularly following disruptions caused by the conflict involving the US, Israel, and Iran, which saw the closure of the Strait of Hormuz—a critical artery for global crude supply.
Current government policy, under the Labour administration, prohibits issuing new licenses for oil and gas fields in the North Sea. A spokesperson emphasized that granting exploration permits would neither secure energy supplies nor reduce consumer bills. They stated, “Regardless of where it comes from, oil and gas is sold on international markets, which set the price for British billpayers, making us a price taker.” Supporting this stance, Energy Secretary Ed Miliband recently highlighted the need for “home-grown, clean power that we control,” pointing to the 30% jump in oil prices as evidence for transitioning to renewable energy sources.
Despite this, OEUK insists the UK’s energy future does not have to be a choice between renewables and fossil fuels. Their report, released recently, notes that oil and gas still account for approximately 75% of the UK’s energy needs and are expected to fulfill about 20% of demand by 2050. However, as domestic production dwindles, demand continues to grow, heightening vulnerability to supply shocks and price fluctuations. David Whitehouse, OEUK’s chief executive, remarked, “Recent events have shown how quickly energy markets can tighten and how easily cargoes can be diverted away from the UK when other buyers bid higher.” He added that the country urgently requires increased supplies of secure, locally produced energy, including oil and gas, which will remain vital to both the economy and the energy system for decades.
OEUK has called on the government to reconsider its bans on offshore oil and gas exploration licenses imposed last year. Presently, production can only be amplified within existing licensed fields or in adjacent areas to maintain project viability. The group is also advocating for the early abolition of the Energy Profits Levy—the windfall tax—proposed to end in 2026, which is currently set at a 78% tax rate. They suggest replacing it with the Oil and Gas Price Mechanism that would apply a 35% tax only when prices exceed certain thresholds. OEUK argues such reforms could unlock £50 billion in new investments within the sector. Reflecting political divisions, the Conservative Party plans to use an upcoming parliamentary Opposition Day debate to push for scrapping the levy and lifting the exploration ban.
Legal challenges have also influenced the industry’s trajectory. A recent judgment from the Court of Session in Edinburgh, prompted by environmental groups Uplift and Greenpeace, found that developers of the Rosebank and Jackdaw fields had inadequately assessed environmental impacts, mandating fresh approval processes. Claire Coutinho, the shadow secretary of state for energy security, criticized moves away from domestic gas production as reckless during a gas supply crisis, calling it “sheer lunacy.” However, research from the University of Oxford questions the economic benefits of expanded North Sea drilling, finding that even maximizing extraction and directly returning revenue to households would yield smaller savings on energy bills than accelerating renewable energy deployment.
Greenpeace’s Mel Evans expressed skepticism toward the industry’s motivations: “The [oil and gas] industry does have billions of reasons to want the UK to cut their taxes and license more drilling. While it wouldn’t take a penny off energy bills or petrol prices, it would maximise the potential oil and gas revenue during an oil war, when prices spike and fossil fuel companies can profiteer more than ever.” This underscores the ongoing debate surrounding the balance between fossil fuel development, investment incentives, and the transition toward sustainable energy sources in the UK
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