A new report from the Institute of Economic Affairs argues that ending UK oil and gas production would damage the economy, increase global emissions and threaten Britain’s energy security.
In a new paper published this morning, energy expert Kathryn Porter of Watt-Logic says oil and gas underpin modern life beyond their role as fuels, including use in hospital equipment, medicines, fertilisers and electronics.
It notes that even under net zero scenarios, no credible forecast shows UK oil and gas demand falling to zero by 2050. The paper says the Climate Change Committee still projects UK demand of 168 million barrels of oil equivalent in 2050, around 40% of current production.
Porter argues that forcing a premature decline in North Sea production does not cut global emissions, and instead increases them. The paper cites the Climate Change Committee, which says imported oil and gas carries a carbon footprint around 50% higher than domestic production.
The paper is particularly critical of the windfall tax, which has raised the headline rate on North Sea production to 78%. It argues that rather than punishing "the populist targets of Shell and BP" it has "devastated independent producers".
It states Harbour Energy paid four times more UK tax in 2022 than Shell despite revenues over sixty times smaller, saw profits fall from $101 million to $8 million, and has since cut more than 700 UK jobs while shifting investment to Indonesia and Mexico.
The paper also highlights that Apache has announced it will end all North Sea operations by 2029, and that Chevron is closing its Aberdeen office after 55 years.
Wood Mackenzie warns 2025 is set to become the first year since 1960 without a single exploration well in the North Sea. The paper says the workforce has already fallen from 120,000 to 115,000, with Robert Gordon University forecasting a decline to as low as 57,000 by the early 2030s.
It adds that 89% of supply chain firms plan to increase non-UK business, while Norway is investing $26 billion in its continental shelf under what it describes as a stable, investment-friendly regime.
The paper also warns that accelerated decline could threaten energy security as offshore pipeline infrastructure loses throughput, risking closures that could strand viable fields. It cites the National Energy System Operator warning that by 2030 there could be insufficient gas to meet UK demand on cold days, with analysts expecting the risk to emerge as early as winter 2026/27.
Report author Ms Porter said: “Oil and gas producers are not the enemy – they produce goods used by all of us every day.
"The windfall tax was supposed to target Shell and BP but instead it has hammered independents, driven investment overseas and vastly accelerated the decline of important tax receipts.
"Unless we change course rapidly, Britain will be increasingly reliant on dirtier, more expensive imports – and less secure on cold winter days when we need energy most.”
The Institute of Economic Affairs is a British right-leaning free market think tank, which is registered as a charity. You can download the full report here.