Offshore Energies UK (OEUK) responds to recent comments by the Chancellor on North Sea oil and gas production.
The UK’s leading offshore energy trade body says the Chancellor’s latest comments on prioritising oil and gas production from the North Sea reflect an increasingly pragmatic and realistic national conversation about the UK’s real-world energy needs. But more clarity on the regulatory landscape for the sector would need to be accompanied by a fiscal environment that encourages investment.
75 per cent of the nation’s energy comes from oil and gas and the government says it is needed for decades to come. The focus has now moved to where it will come from: The UK can make the most of its own resources or choose to ramp up imports, which do not support jobs, economic value and communities, are more carbon intensive and are less secure. Without action the UK is set to rely on LNG shipments for over half its gas by 2035.
Speaking last week, the Chancellor highlighted the role tie-back developments – using existing North Sea infrastructure to bring additional oil and gas to market – can play in boosting domestic supply quickly and efficiently, alongside a commitment to engage with industry to get the detail right. Effective engagement with the industry is now essential if such a policy is to be deliverable and capable of attracting investment from businesses at pace.
To unlock the private investment needed to sustain domestic production and avoid an overreliance on imports, the early implementation of the Oil and Gas Price Mechanism (OGPM) is critical. This permanent, price-triggered mechanism provides a fair return to the public when prices are high, while giving investors the certainty needed to commit capital. However, delaying its implementation to 2030 is too late. Reforming this tax now is the key to unlocking £50 billion of private investment, sustaining production responsibly and maintaining energy security.
David Whitehouse, Chief Executive of Offshore Energies UK, says:
'The Chancellor’s comments point towards a pragmatic recognition of where the UK is today. We still use oil and gas extensively across the economy, and while that remains the case and as we build out world-class renewables, it makes sense to prioritise home-grown supply.
'The commitment to engage with industry matters because credible policy depends on it. Government decisions on the North Sea affect investment, infrastructure and energy supply, and clarity on the pathway ahead – including on taxation – is what turns intent into delivery. Implementing the Oil and Gas Price Mechanism in 2026, not 2030, would help unlock £50 billion of private investment in the UK’s energy future and signal the North Sea is open for business.
'Using our own resources supports energy security, protects jobs and skills, reduces emissions compared to imports and provides the backbone for the next generation of offshore industries. There’s a growing understanding across all parties and the nation that this is not a black and white choice between renewables or oil and gas. We need both to secure and grow the economy today and for decades to come.'
Crucially, domestic oil and gas production also provides a foundation for modern industrial Britain. The same offshore platforms, pipelines, ports and highly skilled workforce underpin other priorities, including carbon capture and storage, hydrogen production and electrification, all of which are essential to delivering net zero while maintaining secure and affordable energy.
Delivering on this vision requires a constructive national narrative that recognises the role oil and gas continue to play, avoids false binaries, and focuses on managing production sensibly while building out low-carbon alternatives.
OEUK has also noted that the government is looking into the possibility of decoupling gas from electricity pricing to help manage household bills. OEUK continues to engage in all related consultations. Reforms to the electricity market are important and must ensure the critical role of gas in balancing supply and meeting peak demand is recognised. Such an approach underlines the ongoing importance of secure domestic supply alongside effective market and regulatory design.
Source: OEUK
