North Sea oil and gas

DOI: https://doi.org/10.58248/RR90 

Introduction 

The UK has been extracting oil and gas (O&G) from the UK Continental Shelf (UKCS) since the late 1960s. The UKCS area is a region surrounding the UK, which the UK has sovereign rights over; it includes parts of the North Sea, the North Atlantic, the Irish Sea and the English Channel. UKCS production used to be dominated by a few very large fields, whereas production now mostly comes from a greater number of smaller fields that are more technically complex and expensive. The UKCS is a mature basin, and its production peaked in 1999, with 2025 production around 20% of 2000 levels. UKCS O&G production is projected to decline further by 2050. 

In 2024 the UK’s total primary energy consumption was 169 million tonnes of oil equivalent (toe), with 35% coming from natural gas and 40% from oil and oil products. The Climate Change Committee states that oil and gas consumption should decrease by 84% and 77% respectively from 2025 levels to reach 2050 net zero targets. Due to the electrification of transport, buildings, and industry and, increasingly, renewable energy sources, there is a reducing demand for fossil fuels. 

The UK’s O&G demand is met by a mix of domestic and imported primary and refined fuels (PDF, pages 20 and 27), see Table 1. Most oil produced in the North Sea is exported, while the UK mainly imports oil for petroleum production in domestic refineries. Charts showing UKCS production trends are available via the UK Extractive Industries Transparency Initiative. 

Measuring oil and gas 

The UK’s energy balances are reported annually in the Digest of UK Energy Statistics (DUKES) in units of tonnes of oil equivalent, tonnes (for oil) and terawatt hours (for gas). The North Sea Transition Authority (NSTA) publishes estimates of remaining O&G in units of barrels of oil equivalent, tonnes and cubic metres, see Table 2.  

The NSTA has different classifications based on the commercial and technical feasibility of O&G extraction, see Table 3. These are separated into reserves and resources: 

• Reserves (P) – from fields in production or under development 

• Contingent resources (C) – from known fields not yet mature enough 

• Prospective resources – undiscovered resources, both mapped and unmapped 

How much is left and how much could be extracted? 

The North Sea Transition Authority (NSTA), formerly known as the Oil and Gas Authority, is an executive non-departmental public body that licences and regulates UK O&G. NSTA’s UK Oil and Gas Reserves and Resources end of 2024 report details its estimates for remaining recoverable petroleum reserves and resources. 

Based on NSTA’s estimates, see Table 4, the UKCS remaining O&G comprises of: 

• 2.9 billion boe of proven and probable reserves (2P) 

• 6.2 billion boe of contingent resources (2C) 

• 4.6 billion boe of prospective resources 

By the end of 2024, a total of 47.7 billion boe of O&G has been produced from the UKCS. The total estimate of reserves and contingent resources (2P and 2C) is 9.2 billion boe, which is around 19% of the total O&G extracted from the UKCS so far.  

NSTA publish more detailed O&G estimates, Table 5, which are separated into classifications based on the chance that the O&G is technical and commercially recoverable in Table 3. Most of the prospective resources and some contingent resources are unlicenced.  

Under current policy, no new licences for O&G will be issued, meaning these resources would not be viable for extraction. The Energy Security and Net Zero Committee inquiry on managing the future of UK oil and gas discusses these topics in more detail.  

Between 2023 and 2024 there was a 12.1% decrease in Proven and Probable (2P) resources due to ongoing O&G production alongside few new sanctioned projects. There was a large increase in prospective resources due to the inclusion of additional exploration areas in the 33rd Licensing Round, see Table 6. 

Most estimates for oil and gas reserves are based on the NSTA estimates, with variations often reflecting different thresholds and assumptions used for the likelihoods of the reserves being producible. A 2018 Scottish Affairs Committee report cited NSTA estimates of 10 to 20 billion boe of reserves remaining in the UKCS, containing approximately 6 billion boe of 2P reserves. A 2016 PWC report using NSTA estimates, including prospective resources, states that there are 20 to 30 billion boe of O&G remaining in the UKCS.  

A 2025 Offshore Energies UK (OEUK) report uses analysis from Westwood Global Energy Group, a market intelligence provider, and estimates 26.5 billion boe of total reserves and resources in the UKCS, with 2.6 billion boe extractable in the low case scenario and 7.5 billion boe extractable with no constraints and a major shift in investor sentiment.  

How are these resources estimated? 

Reserves (P) are contained in approved sites and can be estimated with high certainty from NSTA operator data. Contingent resources (C) are estimated using operators’ assessments of discovered sites, using information such as reservoir size and geological properties. Prospective resources are estimated with greater uncertainty, NSTA use seismic data (PDF) (using sound waves to create detailed subsurface images) and statistical analysis to help ensure valid estimates are made. 

What are the costs associated with extracting?  

The NSTA UKCS Unit Operating Cost dashboard states that the average cost of producing a barrel of oil equivalent was £19.49 in 2024. This cost has risen from £18.39 in 2023 and £13.82 in 2020 (2024 prices). Costs may be increasing because the UKCS basin is ageing and depleted fields are more expensive to maintain and operate. Another factor is the decrease in domestic production in the UKCS, which increases cost per unit. 

There are few reliable estimates on the costs of extracting contingent and prospective resources as these are undeveloped and lack known production or operating costs. Developing them would often include the cost of building new infrastructure and since remaining accessible reserves are often more expensive to extract, it is likely that resources would be more expensive to extract than reserves. The cost of extracting is also dependent on the water depth, with depths greater than 125m costing £23.8/boe and less than 50m costing £17.3/boe.  

Uplift UK, an organisation that advocates for a just clean energy transition says reserves are becoming more expensive to extract as the UKCS is ageing. A report from the think tank Green Alliance suggests that the UKCS production will become a significant annual expenditure for the Government, as opposed to generating revenue. OEUK report that operational and maintenance costs are declining for O&G production. 

The NSTA publish projections of future O&G extraction costs that show costs rising slightly as production decreases, alongside future O&G production estimates. 

Exports and imports 

The 2024 imports and exports of primary oil, petroleum products and natural gas are shown in Table 7, with charts showing trends in production, imports and exports available on the UK Extractive Industries Transparency Initiative (EITI) website. 

 Primary oil 

UK production of primary oil fell to 31 million tonnes in 2024, the lowest since production began. Imports rose by 6.4% between 2023 and 2024 as UK production decreased and demand of primary oils increased. While demand increased compared to last year, there is a long-term decline in demand. In 2024, the primary oil demand was 43% less than in 1999.  

Primary oil exports went up by 2.9% in 2024 compared to 2023. However, this is a minor fluctuation in a downward trend in exports since around 2000.  

In 2024, a third of primary oil imports came from the US, with Norway the second largest source.  

Petroleum products 

Petroleum product exports were stable in 2024 compared to 2023, with 70% going to the EU. The UK is more than self-sufficient for petrol production, so it remains a net exporter of petrol.  

Petroleum product imports increased by 5.9% from 2023, due to increasing demand and low refinery production. Approximately 40% of product imports were diesel and 33% were jet fuel.  

Natural gas and liquefied natural gas 

Total natural gas imports decreased by 8% between 2023 and 2024 to the lowest level since 2008. This was due to a significant decrease in liquified natural gas imports of 47%. Natural gas is only exported via pipeline to Belgium, the Netherlands, Norway, the Republic of Ireland and the Isle of Man. The UK has been a net importer of natural gas since 2004, primarily from Norway and Qatar, and more recently, from the US. 

Why are we exporting? 

The UK exports primary oil that it produces from the UKCS as it lacks appropriate refining capacity to meet domestic demand for oil-based products. This is because UK refineries are designed to process primary oil with a lower sulphur content than oil extracted from UKCS. In 2024 7.7% of the oil used in UK refineries to make petroleum products came from the UKCS. This is down from 50% in 1996. 

Energy security 

OEUK states that the UK could reduce the energy import gap and build energy security by producing an additional 2 to 3 billion boe domestically. Wood Mackenzie, an energy analysis organisation, suggests that the UK could still meet its climate targets while producing an additional 2.6 billion boe. As most oil is exported, however, there is no guarantee that this production would be used domestically.  

The Climate Change Committee states that the best way to limit the UK’s exposure to volatile energy prices is to reduce fossil fuel consumption, and that increases in UK O&G extraction would have a marginal effect on UK consumer prices. The Energy and Climate Intelligence Unit, a non-profit, say that domestic renewables will contribute more to energy security than UKCS O&G.  

Acknowledgments 

POST would like to thank the following people for kindly giving up their time during the preparation of this article: 

• Professor Alexander Kemp, Professor of Petroleum Economics, University of Aberdeen 

• North Sea Transition Authority 

• Department for Energy Security and Net Zero 

Some statistics were contributed by Paul Bolton, House of Commons Library

---

 Photo By: (© By Arild – stock.adobe.com).