The UK risks accelerating the decline of the oil and gas industry despite overwhelming industry belief that the basin could still have a long-term future, a report has said.
The paper by Aberdeen and Grampian Chamber of Commerce found 93 per cent of the businesses surveyed said there is still a future for North Sea oil if the right economic conditions are created.
The UK government has come under severe pressure from US President Donald Trump for failing to better exploit the North Sea's potential. He said the focus on renewables such as wind energy is detrimental to the country's economy.
Earlier this year, Tony Blair's think tank accused the British government of “leading the UK in the wrong direction” with its energy policy, arguing it should reverse its ban on new licences for drilling in the North Sea.
In a scathing report, the Tony Blair Institute described the current Labour government's clean-power plan as flawed “climate theatre” and said the energy profits levy is deterring investment in the resource-rich area.
On Tuesday, the 43rd Energy Transition report said confidence in the fossil-fuel industry is weak due to financial instability, planning delays, transmission charging and slow project consenting, rather than lack of opportunity or capability.
It said businesses had repeatedly warned investment was going abroad because of the country’s poor economic and regulatory policies.
Nine in 10 support new licences and consents, under which operators can demonstrate lower emissions than imported alternatives and deliver greater UK economic value.
The report warns of a “growing transition gap”, creating infrastructure delays and uncertainty around government policy.
It made a number of recommendations, including giving consent to the Jackdaw and Rosebank oilfields, replacing the energy profits levy with an oil-and-gas price mechanism, and quicker planning consent.
Aberdeen and Grampian Chamber of Commerce said the findings highlighted the urgent need for a more competitive and stable policy environment if the UK is to retain the workforce and industrial capability required to deliver energy security and reach net-zero targets.
Chief executive Russell Borthwick said: “For several years now, the dominant political narrative has increasingly suggested that the future of the North Sea is already decided. This report tells a very different story.
“The overwhelming majority of businesses operating across the energy sector still believe there is a future for the basin if the UK creates the right fiscal and regulatory conditions to support it.
“What companies are questioning is not the capability of the North Sea, but whether the UK is still competitive enough to attract the investment required to deliver that future.”
Mr Borthwick said the North Sea remained “one of the UK’s greatest industrial assets” and said the same workforce that built the sector over the past five decades would also be “critical to delivering offshore wind, carbon capture, electrification and wider transition infrastructure”.
He added: “But investment follows stability and right now too many businesses believe the UK is losing ground to international competitors offering clearer policy, faster consenting and more predictable long-term conditions.
“The message from industry is becoming increasingly clear – you cannot deliver energy security, economic growth and the energy transition while simultaneously hollowing out the industrial base required to achieve all three.”
A Department for Energy Security and Net Zero representative said: “Oil and gas production will be with us for decades to come, and we will manage existing fields for the entirety of their lifespan, while actively scaling up clean energy industries in the North Sea. Our ambitious plans will make the North Sea a clean energy powerhouse and support up to 40,000 new jobs in Scotland by 2030.”
A Scottish government representative said: “Decisions on consenting for offshore oil and gas projects, as well as those on licensing and the associated fiscal regime, are matters currently reserved to the UK government.
“We continue to call on the UK government to approach decisions for North Sea oil and gas projects on a rigorously evidence-led, case-by-case basis, with climate compatibility and energy security key considerations.”
