Why Britain Must Support North Sea Oil And Gas Now

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Aug 19, 2026

Britain still needs oil and gas for years to come. The real choice is whether we produce it here or keep importing it at higher cost and higher emissions. The decision on two major projects could shape the next decade.

Financial market analysis from 19/08/2026. Market conditions may have changed since publication.

I’ve been watching the debate around Britain’s energy future for years, and one thing keeps standing out. While everyone agrees we must cut emissions and expand renewables, the country still relies on oil and gas for roughly three-quarters of its energy needs. That reality does not disappear just because we want it to. The practical question is simple: do we produce more of what we need at home, or do we keep importing it from elsewhere while watching skilled jobs and industrial capacity slowly erode?

The Real Choice Facing Britain On Energy

Two projects currently sit at the centre of this discussion. One is expected to deliver a meaningful share of the UK’s gas supply in the near term. The other represents a substantial opportunity to keep domestic production flowing while demand remains strong. Together they have already attracted more than three billion pounds in investment, with total expected spending climbing toward eleven billion. Over their lifetimes they could add nearly thirty billion pounds to the UK economy and generate more than a billion in tax revenue before the end of the current parliamentary term.

These numbers matter. They are not abstract. They translate into real activity across more than one hundred and seventy supply-chain companies already involved. At peak construction the projects are projected to support around three and a half thousand jobs. Once producing, they should sustain nearly nine hundred long-term positions and create over a hundred apprenticeships. Those roles sit in engineering, project management, offshore operations and the wider support network that keeps complex energy infrastructure running.

I’ve spoken with people who work in these fields. Many of them make the same point: the skills required to design, build and maintain North Sea platforms are not somehow obsolete. They are the same capabilities needed for large-scale offshore wind, hydrogen production and carbon capture projects. If the industrial base that holds those skills is allowed to shrink too quickly, rebuilding it later becomes far more expensive and far slower.

Why Domestic Production Still Matters

Some voices argue that the quickest path to net zero is simply to stop approving any new oil and gas activity. On paper that sounds decisive. In practice it runs into a hard limit. If UK production declines faster than demand, the country does not stop using oil and gas. It simply imports more of it. And those imports usually arrive with a higher emissions footprint, particularly when the alternative is liquefied natural gas shipped from distant producers.

Independent assessments have suggested that production emissions associated with these two projects could be roughly eight times lower than the emissions linked to equivalent volumes of imported LNG. That difference is not trivial. It means that choosing domestic supply over additional imports can deliver a genuine emissions benefit even while the broader transition continues.

There is also the question of influence. When energy is produced at home, the regulatory framework, the safety standards and the reporting requirements are under UK control. When it is imported, those levers sit elsewhere. For a country that still needs substantial volumes of oil and gas for heating, transport and industrial processes, retaining a measure of control over the source is not an ideological position. It is a practical one.

Jobs, Skills And The Supply Chain

The employment impact deserves closer attention. Peak construction employment of around three and a half thousand people is significant in the regions that have specialised in offshore work for decades. The longer-term production jobs, while smaller in number, tend to be highly skilled and relatively well paid. Apprenticeships create a pathway for younger workers to enter the sector at a time when many traditional routes into engineering have narrowed.

Beyond the direct headcount lies the supply chain. More than one hundred and seventy UK companies are already engaged. These range from specialist fabricators and equipment suppliers to service providers and logistics firms. Their order books, their investment decisions and their ability to retain staff all respond to the visibility of future work. A clear signal that major projects will proceed can unlock further activity across that network. Silence or delay does the opposite.

In my view, the industrial strategy argument is one of the strongest. Britain will need a robust offshore capability for the next several decades as it builds out wind, hydrogen and carbon management infrastructure. The companies and the workforce that currently support oil and gas are the most ready-made foundation for that future. Allowing them to wither while demand for their skills is still high seems a peculiar form of planning.

Investment Signals And The Wider Pipeline

Approval of these two projects would not resolve every difficulty facing the North Sea basin. It would, however, send a useful signal. Industry estimates point to a potential fifty-billion-pound pipeline of oil and gas investment that could be unlocked over the coming decade if the policy environment remains workable. That capital would support further jobs, further tax contributions and further domestic supply at a time when global energy markets remain volatile.

Capital is mobile. Investors look at fiscal terms, regulatory timelines and political risk. When those factors become unpredictable, money tends to move toward jurisdictions that offer clearer visibility. Britain has decades of experience and a sophisticated regulatory system. It also has mature infrastructure already in place. Using that existing advantage while demand continues looks more rational than deliberately running down the sector faster than the market requires.

The tax revenue dimension is often underplayed. Over a billion pounds expected before the end of this Parliament is a meaningful sum. In an era of tight public finances, additional receipts generated by domestic production can support public services without requiring higher taxes elsewhere. That is not a decisive argument on its own, but it is a relevant one.

Energy Security In An Uncertain World

Energy security has returned to the centre of political discussion after several years of sharp price spikes and supply disruptions. The lesson many countries have drawn is that over-reliance on distant suppliers carries real costs. Domestic production does not eliminate exposure to global prices, but it does reduce the volume that must be purchased on the international market and it keeps more of the associated economic activity inside the country.

One of the projects under discussion is projected to supply more than six per cent of UK gas demand by the coming winter. That is equivalent to the gas required to heat roughly one and a half million homes. In a system where gas still plays a critical balancing role alongside growing renewable capacity, every additional percentage point of domestic supply reduces the need for imports.

Critics sometimes frame any support for oil and gas as a retreat from climate goals. I think that framing is too binary. The UK can continue to expand renewable generation, improve energy efficiency and develop low-carbon technologies while also maintaining a pragmatic approach to the fuels that still dominate current consumption. The two are not mutually exclusive.

Emissions Accounting And Honest Trade-Offs

One of the more useful contributions to the debate has been the comparison of production emissions. When domestic output carries a markedly lower emissions intensity than the imported alternative, reducing domestic production while demand stays high can actually increase the emissions associated with the energy the country consumes. That outcome is the opposite of what most people intend when they call for faster phase-outs.

Honest policy requires looking at the full picture. Demand for oil and gas will decline over time as electrification and efficiency gains take hold. The speed of that decline is uncertain and depends on technology, behaviour and investment across many sectors. In the meantime, the choice is between lower-emission domestic barrels and higher-emission imported ones. Pretending the choice does not exist does not make it go away.

I have found that the most constructive conversations start from that recognition rather than from slogans. The UK needs a rapid build-out of clean energy. It also needs a managed approach to the fuels that still power most of the economy. Both statements can be true at once.

Industrial Capacity For The Transition

Perhaps the most interesting aspect of the whole discussion is the overlap between today’s oil and gas workforce and tomorrow’s low-carbon industries. Offshore wind farms require similar marine engineering expertise, similar project management discipline and similar supply-chain capabilities. Carbon capture projects need pipeline and subsurface knowledge that currently resides largely in the oil and gas sector. Hydrogen production at scale will draw on many of the same industrial skills.

If those skills are allowed to disperse because the transition is managed too abruptly, the country will later have to reassemble them under greater time pressure and at higher cost. Maintaining a core of activity in the North Sea while demand remains provides a bridge. It keeps people employed, keeps companies investing in training, and keeps the industrial ecosystem intact.

This is not an argument for indefinite expansion. It is an argument for avoiding an unnecessarily sharp contraction while the rest of the energy system is still catching up. The distinction matters.

What A Practical Path Looks Like

A sensible approach would combine continued support for renewables with a clear framework for remaining oil and gas activity. That framework should prioritise projects with lower production emissions, strong local content and a contribution to energy security. It should also provide the regulatory predictability that long-cycle investment requires.

Public consultation on the two projects in question has already closed. Ministers now face a decision that will be read as a signal about the wider direction of policy. Approving them would not solve every challenge in the basin, but it would demonstrate that the government understands the need to balance ambition with realism.

The alternative path is higher import dependence, weaker domestic industrial capacity and less influence over the emissions intensity of the energy the country actually uses. That path does not accelerate the transition. It simply makes the intermediate years more expensive and more insecure.

Looking Ahead With Clear Eyes

Britain should remain ambitious about renewables and about the broader shift to a lower-carbon economy. Ambition does not require ignoring the energy system that exists today. Oil and gas still meet the majority of current needs. That fact will change, but it will not change overnight.

In the years while demand remains substantial, producing more of what the country needs at home offers several advantages: lower production emissions than many imports, support for skilled jobs and supply chains, additional tax revenue, and a measure of energy security that pure import dependence cannot match. Those advantages do not disappear simply because the long-term direction of travel is toward cleaner sources.

The projects under consideration represent a concrete test of whether policy can hold both realities at once. Supporting them would not constitute a retreat from net zero. It would constitute a recognition that getting there requires practical steps as well as long-term targets. The skilled people, the industrial base and the investment appetite still exist. The question is whether the policy environment will allow them to be put to work while they are still needed.

I remain convinced that the more responsible course is the one that keeps domestic production available during the transition rather than the one that accelerates import dependence. The numbers on investment, jobs, tax and emissions all point in the same direction. The decision now rests with those who set the rules.


The debate will continue, of course. Some will insist that any new activity is incompatible with climate goals. Others will argue that the economic and security benefits outweigh the concerns. What is harder to dispute is the underlying arithmetic: as long as oil and gas form the majority of UK energy consumption, the choice between domestic barrels and imported ones carries real consequences for emissions, employment and resilience. Facing that choice honestly seems the least we should expect from energy policy.

Over the next decade the North Sea will remain relevant whether policy acknowledges it or not. The volume of activity, the strength of the supply chain and the retention of specialist skills will depend in part on decisions taken in the coming months. Those decisions will shape not only the immediate projects but the broader capacity of the UK to manage a complex energy transition without unnecessary self-inflicted costs.

In the end the argument is not about nostalgia for a previous industrial era. It is about recognising that the engineering and project capabilities developed over decades of North Sea operations remain valuable assets. Deploying them while demand for oil and gas continues, and while the same skills are needed for the next generation of energy infrastructure, looks like common sense rather than contradiction.

Britain can pursue an ambitious clean-energy agenda and still back domestic production during the years when that production is required. Doing both is harder than choosing one slogan over another, but it is also more likely to deliver the outcomes most people actually want: reliable energy, lower emissions intensity where possible, and an industrial base that can support the transition rather than being dismantled before the new system is ready.

The projects now under review offer a chance to demonstrate that balance in practice. The investment is already partially committed. The supply chain is engaged. The potential contribution to near-term gas supply is material. The emissions comparison with imported alternatives is favourable. Taken together, these factors make a strong case for proceeding. Whether that case is accepted will say a good deal about how seriously the country intends to manage the practical realities of its energy future.

The only investors who shouldn't diversify are those who are right 100% of the time.
— Sir John Templeton
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