The UK Government is being urged to adopt a pragmatic and regulated approach to oil and gas measures to avoid deepening the UK’s reliance on imports, protect energy security, reduce carbon emissions, and support a just transition to net zero.
Despite declining domestic production and ambitions to pivot away from fossil fuels, oil and gas still meet three-quarters of the UK’s energy needs, with gas alone supplying over 85% of domestic heating and cooking for homes and often providing more than half of electricity generation during low renewable output.
The UK’s growing dependence on imports – from countries including Norway, the USA, Qatar and Algeria – raises concerns about geopolitical risk, economic impact and environmental impact, with some imported gas derived from fracked shale, a carbon-intensive process which is banned in the UK.
Closures of key refineries like Grangemouth and Lindsey further compound the issue, with some North Sea product exported for refining and then re-imported – adding to the carbon footprint and undermining climate goals.
Premature closure of critical infrastructure including pipelines has led to gas reserves being stranded in the Southern North Sea, and the recent decision to decommission the Gryphon Floating Production, Storage and Offloading (FPSO) vessel threatens the future of oil fields that rely upon it.
While the UK has made significant progress in reducing emissions – down over 50% since 1990 and now amounting to less than 1% of global emissions, of which upstream oil and gas operations only account for 3%, equating to 0.03% of global emissions – the government’s ban on new fields and new drilling licences, the Energy Profits Levy and low commodity prices have created uncertainty, discouraged investment and threatened the viability of existing infrastructure.
An independent review carried out by Professor John Underhill, Director of Energy Transition at the University of Aberdeen’s Interdisciplinary Institute, identifies a policy change that offers a solution for investment and growth, increases energy security, addresses environmental sustainability and global climate impacts, yet is also consistent with Labour’s manifesto commitment of no new licences.
Review recommendations
His review recommends a number of actions for government to consider:
- Permit near-field and infrastructure-led exploration
Allow bespoke oil and gas permits around strategic and critical infrastructure consisting of existing pipelines and fields to unlock modest but high-impact discoveries. - Strengthen regulation and stewardship
Eliminate routine flaring, incentivise platform electrification and support carbon storage to reduce emissions from domestic production. - Safeguard critical infrastructure
Ensure existing pipelines and platforms remain economically viable to prevent premature shutdowns and stranded reserves. - Support industry confidence
Provide clear signals that strategic projects can proceed to maintain investment, encourage economic growth, safeguard jobs and maximise tax revenues.
Professor Underhill said: “We all want to see a cleaner, greener future but we must also be honest about the energy reality today. The UK still relies heavily on oil and gas and without a clear and pragmatic plan, we risk replacing home-grown supply with higher-emission imports, something that is worse for the climate.”
“The current policy contrasts with reversals seen in countries like New Zealand and the Netherlands, where domestic production has been re-prioritised in response to energy security concerns. Norway has also recently announced it will continue to issue oil and gas licences.”
“A balanced, regulated approach can help the UK meet its climate commitments while ensuring energy resilience, economic stability, and smooth our transition to low-carbon renewables.”
“Allowing the issue of bespoke permits for near-field or infrastructure-led exploration is a practical way to arrest an otherwise ever-increasing dependency on imports, provide support for the sector at a time of stress, enhance energy security, avoid the premature closure of critical facilities, reduce our impact on global emissions and help avoid an unmanaged, disorderly and unjust outcome for communities, be they based in Aberdeen or across the UK.”
Industry reaction
Reacting to Professor Underhill’s intervention, Russell Borthwick, Chief Executive of Aberdeen & Grampian Chamber of Commerce, said: “Energy security, economic growth and our transition to net zero are not competing priorities – they must be delivered together. Professor Underhill’s proposals offer a pragmatic, regulated pathway which keeps the lights on, drives investment and GDP, protects skilled jobs, and avoids the perverse outcome of further increasing imports with a multiple times higher carbon footprint.
“We cannot allow short-term political positioning to drive decisions that will have long-term consequences for our economy, our climate, and our communities. The reality is that oil and gas will still be part of the UK’s energy mix for decades to come – the choice we face is whether that supply is responsibly produced here, or imported from overseas with less regulation, higher emissions and little economic benefit.
“The UK has an opportunity to show global leadership by managing the decline of domestic production responsibly, sweating existing infrastructure and assets, investing in low-carbon technologies, and ensuring the supply chain and skills we have today are still here to support the transition. That will require immediate changes in fiscal and regulatory policy direction from government. Bringing us in line with the approach being taken by many of our peer nations.”
David Whitehouse, Chief Executive, Offshore Energies UK (OEUK), said: “OEUK welcomes this independent research and its conclusions. The proposals Professor Underhill puts forward come at an important time, when critical decisions made by government in the coming months will shape the future of the North Sea directly impacting on the livelihoods of those working in the sector.”