North Sea oil faces record low investment as UK energy tax changes spark investor caution
Last updated: 10:14 28 May 2025 EDT, First published: 04:00 08 May 2025 EDT
Cavendish Research Director James McCormack talked with Proactive about the serious decline in investment in the UK North Sea oil and gas sector.
According to McCormack, capital expenditure has significantly fallen following the introduction of the Energy Profits Levy, with only around £100 million forecast for exploration in 2024—a record low. “There are only four exploration and four appraisal wells planned this year,” he said, highlighting the sharp reduction in drilling activity.
He raised concerns that the continued departure of drilling rigs may lead to a critical shortage of resources, jeopardising not only exploration but also essential decommissioning operations. McCormack outlined a bleak scenario where the UK risks failing to meet its own energy demand, warning that “many fields could reach abandonment earlier than expected.”
Referencing data from Offshore Energies UK, McCormack noted the UK needs 13–15 billion barrels of oil over the next 15 years, but under current conditions, only 4 billion may be sourced domestically. With suitable fiscal incentives, this could rise to 7 billion barrels—still leaving a considerable gap.
He also highlighted that the estimated £45 billion in decommissioning liabilities includes around £11 billion that could fall to the government, a burden not widely understood. Furthermore, 200,000 jobs—1% of the UK’s workforce—are tied to the sector, with a significant impact expected if investment does not return.
For the full interview that discusses what's at stake for investment in the North Sea, follow this link.
For more insightful interviews, visit Proactive’s YouTube channel. Don’t forget to like the video, subscribe, and enable notifications to stay updated.
#NorthSeaOil #UKEnergy #OilAndGasInvestment #CavendishResearch #JamesMcCormack #EnergyProfitsLevy #Decommissioning #UKOilAndGas #ProactiveInvestors #ExplorationDrilling #EnergyPolicyUK
