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North Sea oil and gas

Oil and gas have been produced from the UK’s North Sea since the late 1960s and early 1970s. Production peaked in 1999 and has since decreased by over 70%. The UK has been a net importer of oil since 2005 (except for 2020) and a net importer of gas since 2004, as production from the North Sea has declined faster than demand.

The UK is expected to continue to need oil and gas to supply its energy and industrial needs out to 2050, but domestic production will provide a decreasing proportion of domestic demand. Between 2025 and 2050, the North Sea Transition Authority (NTSA) projects that:

• The UK’s overall demand for oil will be around 2.6 times as much as domestic production
• The UK’s overall demand for gas will be 3.3 to 3.7 times as much as domestic production.

This briefing focuses on UK offshore oil and gas production from the North Sea. While the UK does produce oil and gas from other areas of the UKCS, such as the Irish Sea, and from onshore oil and gas fields, the vast majority of the UK’s overall oil and gas production comes from the North Sea.

How are North Sea oil and gas projects licensed and consented?

Offshore oil and gas activities are controlled through a system of licences and consents, which companies must have before undertaking certain activities related to offshore oil and gas production.

The North Sea Transition Authority (NSTA), acting on behalf of the government, awards licences that grant the right to “search and bore for and get” petroleum (which includes both oil and gas) in the UK. For offshore oil and gas production, the NSTA awards:

• Seaward Exploration Licenses, which grant non-exclusive rights to explore an offshore area and undertake certain “non-intrusive” exploration activities. Exploration licenses can be awarded at any time.
• Seaward Production Licenses, which grant exclusive rights to extract oil and gas from an offshore area. Production licenses are primarily awarded during competitive ‘licensing rounds’, but they can also be awarded outside licensing rounds in exceptional circumstances.

Offshore oil and gas companies may also need further licences and permits, such as those related to the environmental impact of offshore activities.

As well as licences, the NSTA issues consents for specific activities relating to offshore oil and gas. This includes Development and Production consent, which is required to install platforms and associated infrastructure and begin extracting oil and gas.

Certain offshore oil and gas projects also need agreement from the Secretary of State before consent can be granted, as set out in the Offshore Oil and Gas Exploration, Production, Unloading and Storage (Environmental Impact Assessment) Regulations 2020.

Government policy

The 2025 North Sea Future Plan set out the government’s policy on future oil and gas licences. The plan said that the government:

• would not issue new licences for further oil and gas exploration or production
• would introduce Transitional Energy Certificates (TECs), which allow additional production from areas of the North Sea next to existing licensed areas, to help manage the decline of existing oil and gas production facilities.

These decisions do not revoke existing licences or restrict consenting decisions for projects with licences, which means that projects that already have production licences may still be able to commence production.

The government said it intends to implement these polices through the Energy Independence Bill, which was announced in the 2026 King’s Speech.

The government’s decision not to issue new licences has drawn criticism from some opposition parties and the oil and gas industry, which have said that the UK will continue to need oil and gas until 2050, and that sourcing more of it domestically would be better for energy security, the UK’s economy and jobs, and for the climate.

However, it was welcomed by environmental groups.

Rosebank and Jackdaw

The Rosebank and Jackdaw fields are two licensed fields that have not commenced production. Production from Rosebank would be primarily oil (90%) with some gas (10%) and production from Jackdaw would be primarily gas with coincidental production of smaller volumes of natural gas liquids (NGLs) and gas condensate.

While both Rosebank and Jackdaw have previously been granted consent (with the agreement of the Secretary of State) to begin production, these consents were effectively quashed by the Court of Session in Edinburgh in January 2025. New applications for consent for both Rosebank and Jackdaw have since been submitted to the NSTA in July 2026, with public consultations that ran from July to August 2026.

In optimistic production scenarios:

• Rosebank could produce 437 million barrels of oil, or 62.4 million tonnes of oil equivalent, and 10.7 billion cubic metres of gas. This would be equivalent to around 12% of oil imports and 2% of gas imports between 2025 and 2050, as projected by the NSTA.
• Jackdaw could produce 10 billion cubic metres of gas. This would be equivalent to around 2% of gas imports between 2025 and 2050, as projected by the NSTA.

However, given the UK currently exports the majority of domestically produced oil, opponents argue that oil produced from Rosebank is unlikely to be used domestically and therefore won’t materially improve UK energy security.

They also argue that, even though additional gas could reduce reliance on imports, the additional production from Jackdaw and any reduction in imports would be small.

On 17 August 2026, the Telegraph reported that Andy Burnham was “minded to approve the substantial Jackdaw gas field” but that “the fate of Rosebank… is hanging in the balance”.

How are North Sea oil and gas taxed?

Currently, the effective marginal tax rate on oil and gas production from the North Sea is 78%. This comprises a number of different taxes including the Energy Profits Levy (EPL).

The Energy Profits Levy was initially introduced in 2022 due to the high costs of energy caused by Russia’s invasion of Ukraine. It is an additional tax on oil and gas, currently set at 38%, that is intended to address extraordinary profits in the oil and gas sector due to increased oil and gas prices. It is set to be in force until either 31 March 2030 or until oil and gas prices return to “historically normal” levels and the Energy Security Investment Mechanism is triggered.

Both oil and gas prices and oil and gas company profits have increased in 2026 as a result of the US/Israel–Iran conflict, to their highest levels since Russia’s invasion of Ukraine in 2022.

The government has confirmed that the Energy Profits Levy will be replaced by the Oil and Gas Revenue Levy, which will be a permanent mechanism that will act as a windfall tax if there are future oil and gas price spikes.

How does North Sea production affect energy security?

Domestic production of oil and gas is generally seen as beneficial to the UK’s energy security, given that the UK relies on oil and gas to meet the majority of its energy demand.

However, the extent to which increasing North Sea oil and gas production would improve energy security is disputed.

Proponents of more North Sea production, such as Offshore Energy UK (OEUK), say that increasing domestic production would improve energy security because it would reduce the UK’s reliance on imports which are at greater risk of disruption.

However, other organisations, such as Frontier Economics (a consultancy) and the UK Energy Research Centre (an independent research centre) have said that:

• The benefits of increased domestic production on the UK’s energy security would likely be small, because the UK would continue to rely on imports even if North Sea production was increased.
• Increased North Sea production would not affect domestic prices of fuels, gas or electricity because the price of oil and gas is heavily influenced by international markets.

How does North Sea production affect the economy and job market?

Data from the Office for National Statistics shows that UK oil and gas extraction accounted for almost £19 billion of gross value added (GVA; the value generated by goods and services) in 2025, 0.7% of the UK’s overall GVA.

Employment in the oil and gas extraction industry has declined over the last decade, from around 38,000 jobs in 2015 to 28,000 in 2024. The majority of jobs in oil and gas extraction are in Scotland.

A key focus of the North Sea Future Plan is ensuring that North Sea oil and gas workers and communities are supported as oil and gas production declines and the clean energy sector grows.

The North Sea Future Plan sets out actions across four themes to support oil and gas workers and communities during the transition:

• ensuring oil and gas and clean energy jobs are high quality
• setting out clear pathways for oil and gas workers to move into other sectors
• removing qualification barriers and providing opportunities to retrain
• involving workers and communities in planning and delivering the transition.

This is in addition to TECs, which will help to provide continuing employment for oil and gas workers by enabling existing oil and gas production facilities to remain active.

However, a number of organisations have criticised the government’s plans to transition oil and gas workers into clean energy jobs, stating that there is a “cliff-edge” facing oil and gas workers and that the pace of clean energy job creation is slower than the decrease in oil and gas jobs (PDF).

How does North Sea production affect the climate and environment?

North Sea oil and gas production has both domestic and global climate impacts, as well as environmental impacts on the North Sea itself.

Climate and carbon emissions

When production, transport and combustion of gas is accounted for, North Sea gas is around 15% lower in carbon emissions than imported liquefied natural gas (LNG). This is because the emissions associated with production and transport are lower than imported LNG. Additionally, it is not clear whether increased North Sea oil and gas production would result in lower global emissions, as increased domestic production could increase overall global production and consumption of oil and gas, and thus increase overall emissions.

Emissions from fuel supply (almost all of which are due to oil and gas supply) were 7% of UK annual emission in 2025. The government’s Carbon Budget Growth and Delivery Plan, published in October 2025, sets out plans and policies to meet the emissions reductions required under UK climate laws. It assumes declining domestic oil and gas production, but accounts for the possibility of new production from licensed fields, such as Rosebank and Jackdaw.

The government has argued that its decision not to issue more oil and gas licences aligns with the objective to limit global warming to 1.5°C and enables the UK to demonstrate credible climate leadership, which the Climate Change Committee has acknowledged “has helped drive progress in tackling climate change at the global level”.

Environmental impacts

Oil and gas extraction in the North Sea can cause pollution, for example, through discharging contaminated water. It can also damage the environment through the physical impact of installing infrastructure and pipelines, and noise from seismic surveys and drilling.

The Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) controls the discharge of contaminated water through permits, but environmental campaigners have criticised the level of self-reporting by industry and the low level of prosecutions and fines for breaches.

How is North Sea infrastructure decommissioned?

Offshore oil and gas companies are required to decommission their infrastructure at the end of its productive life. The primary decommissioning obligations are established by the Petroleum Act 1998, and OPRED is responsible for ensuring that oil and gas companies comply with the requirements of the act.

Expenditure on decommissioning is set to increase over the coming years as more infrastructure ceases production. In 2025, the NSTA forecast that expenditure on decommissioning is forecast to total £27 billion between 2023 and 2032. 

The North Sea Future Plan and the 2023 Global offshore upstream decommissioning export strategy highlighted the economic opportunity of offshore oil and gas decommissioning in the UK.

However, the North Sea Future Plan also noted that many planned decommissioning activities in the UK are delayed and that this is creating a backlog of work. The government set out its intention to address the risks presented by growing decommissioning delays by granting new powers to the NSTA, including the power to impose enforceable milestones for decommissioning wells.

The UK’s current approach to decommissioning requires removing infrastructure that cannot be repurposed for other activities such as carbon capture usage and storage (CCUS). However, there is increasing debate as to whether removing infrastructure achieves the best environmental outcomes.