The UK faces mounting pressure to ramp up its oil and gas production in the North Sea, according to a leading industry group. Offshore Energies UK (OEUK) contends that expanding domestic drilling is vital for energy security and economic stability, even as the nation transitions towards greener alternatives.

Calls for Increased Domestic Production

Offshore Energies UK has made a strong case for urgent expansion of oil and gas extraction within the North Sea, arguing that the UK can't afford to turn its back on homegrown energy resources. The organisation points out that while renewables are growing, oil and gas still supply approximately 75% of the country’s energy needs. Even by 2050, these fossil fuels are expected to account for around a fifth of demand.

OEUK’s 2026 business outlook warns that without a boost in domestic output, the UK risks becoming increasingly dependent on imports at a time when global energy markets are volatile. The group highlights that North Sea gas, for instance, carries a lower emissions footprint than imported liquefied natural gas (LNG), making it a comparatively cleaner option.

Taxation and Licensing Changes Proposed

To unlock fresh investment, the trade body calls for the scrapping of the Energy Profits Levy (EPL), commonly known as the windfall tax, four years earlier than planned—in 2026. Under current rules, energy firms pay 78% tax on profits, but OEUK suggests replacing this with a new Oil and Gas Price Mechanism that would impose a 35% levy only when prices exceed a certain threshold.

This shift, the group claims, could unlock £50 billion in new investment for UK oil and gas projects. OEUK is also pushing the government to lift the existing ban on new oil and gas licences and approve two Scottish fields—Rosebank and Jackdaw—that were blocked last year after environmental campaigners challenged their approval.

Environmental and Economic Tensions

Claire Coutinho, shadow secretary of state for energy security, has condemned the government's hesitance to back domestic gas production, especially during the current supply crunch. She described turning away from UK gas as "sheer lunacy" amid a crisis affecting millions of homes.

Yet critics remain unconvinced. Environmental groups and researchers from the University of Oxford question the notion that ramping up North Sea drilling will substantially ease household energy bills. Their analysis suggests that even maximising local oil and gas extraction would only reduce annual energy costs by about £82 per typical household, a modest sum compared to the savings possible through faster renewable adoption.

Mastheads

Mel Evans of Greenpeace UK warned against the oil and gas industry's push to cut taxes and expand drilling. She described the move as primarily benefiting fossil fuel companies during periods of price spikes, rather than consumers facing high costs.

Energy Security Versus Climate Goals

OEUK insists that supporting domestic oil and gas production doesn't mean ignoring climate targets.

Enrique Cornejo, the group’s director of energy policy, said the UK risks simply shifting emissions overseas if it stops producing energy at home. He argued that a responsible approach involves balancing climate commitments while ensuring reliable and affordable energy supply.

Cornejo explained: "For as long as the UK needs oil and gas, it makes sense to produce as much of that here." He pointed to the complexity of carbon accounting, where emissions are counted in the country where production happens, not where consumption occurs.

At the same time, OEUK acknowledges the expanding role of offshore wind, carbon capture, and hydrogen in the UK’s energy mix. But oil and gas will remain necessary in the medium term.

Market Realities and Price Impact

Despite the calls for more drilling, experts note that increased North Sea production wouldn't necessarily translate into lower bills. The UK’s energy prices are set on international markets, where oil and gas are traded globally. Any new output would be sold at prevailing world prices, limiting the potential direct benefit to UK consumers.

Also, the UK’s electricity market tends to price power based on the costliest source needed to meet demand—often gas-fired plants—meaning that even with cheaper renewable inputs, gas prices heavily influence retail electricity bills.

The country’s reliance on gas for heating—about 85% of households use gas boilers—and poorly insulated homes amplify vulnerability to price swings. So, while boosting North Sea production might reduce import dependency and support jobs, it's unlikely to shield consumers from volatile global energy costs.

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As the UK grapples with energy security and affordability amid geopolitical uncertainty, the debate over North Sea drilling is intensifying. Whether government policy will shift to embrace more domestic oil and gas production alongside renewable growth we'll have to wait and see.

This article was created with AI assistance.