The House Opinion Article | The North Sea still matters

4 min read23 min

For decades, China has realised the importance of energy security to its long-term success. It increased electrification, with a corresponding rise in domestic renewables and a massive increase in strategic oil and gas reserves.

Meanwhile, the UK has failed to learn the lessons of energy crises dating back to the 1970s. The dual shocks of the Russian invasion of Ukraine in 2022 and the ongoing conflict in the Middle East present an opportunity to correct this.

These events have shown in the starkest terms that relying on global markets alone leaves the UK dangerously exposed to external shocks. Energy security is why the government and the oil and gas industry must abandon short-term, distracting arguments around price and tax revenues, and work together.

The physical protection of energy infrastructure is central to national resilience and our deterrence posture. In 2024, the UK relied on imports for 43.8 per cent of its primary energy, up sharply from 28 per cent in 2020, reflecting a significant rise in dependence on external suppliers.

Domestic oil and gas production fell to a record low, declining 6.5 per cent year on year, as output from the UK’s mature continental shelf continued to contract. Production is now around 20 per cent of its 2000 level. Meanwhile, UK gas consumption in 2024 reached 689 TWh, compared to domestic production of just 344 TWh, leaving a substantial structural deficit.

In a world of rising geopolitical tension, that deficit is a strategic weakness. A stable, managed level of North Sea output is not about returning to past production peaks; it is about ensuring the UK retains sovereign access to critical energy supplies when global markets tighten, or hostile states attempt to disrupt or attack our country.

Offshore Energies UK accepts that increased production in North Sea oil and gas would have no meaningful impact on UK energy prices, as that product is sold on an international market, which dictates the price. A secondary claim that increased production would generate tax receipts to bring down energy prices is also questionable. Research by the University of Oxford found that even in the implausible scenario of the UK being able to maximise North Sea oil and gas and use all revenues to subsidise lower energy bills, the impact would be limited, a maximum of £82 per year off a household bill.

However, there are two reasons the future of North Sea oil and gas remains critical and should be supported.

First, given the volatility and increased tension around the world, the government should explore an agreement to allow increased extraction with a binding commitment that a sufficient reserve is created against future shocks and, in the event of a crisis, North Sea oil and gas would be provided to UK markets for a fixed, lower price to protect households and businesses.

Second, we must fully bridge the skills gap between current oil and gas and a more secure renewables future. Around 154,000 workers are employed across the UK’s offshore energy sector. These are well-paid and highly technical jobs protected by trade unions.

The UK recently secured a record 14.7 GW of new renewable capacity, enough to power up to 16m homes. The UK now has an unprecedented acceleration in renewable deployment and a major reinforcement of the UK’s long-term energy security and resilience.

This represents a once-in-a-generation opportunity to build careers in high-skill, high-wage, union-protected industries. But that opportunity only exists if we preserve the workforce pipeline built by the North Sea.

Skills in the North Sea oil and gas supply chain are directly transferable to the renewable system: subsea engineering, marine operations, fabrication, grid upgrades and home construction. Yet the oil and gas workforce risks falling to between 57,000–71,000 by the early 2030s. Losing that capability would weaken our security and our ability to deliver large-scale clean energy projects.

A stable tax regime matters too. That is why the Oil and Gas Price Mechanism should replace the Energy Profits Levy, supporting investment while ensuring the public benefit when prices are high. The oil and gas industry should be working with government to make the case that a secure, responsibly managed North Sea is essential to national resilience and deterrence, and is the bridge to the skills we need for the UK’s renewable future.

Graeme Downie is the Labour MP for Dunfermline & Dollar