Jun 25, 2025
UK's oil and gas reserves are being underestimated due to policy influences.
UK authorities are greatly undervaluing the country's recoverable oil and gas reserves due to tax and environmental policies that hinder resource recovery, according to Offshore Energies UK (OEUK). This assertion is based on an independent report from Westwood Global Energy Group, which estimates that recoverable reserves could reach 7.5 billion barrels of oil equivalent, compared to the government's February 2025 estimate of 3.75 billion boe. OEUK stated there is a vital difference between a natural decline and one accelerated by policy, suggesting that the UK could satisfy half its oil and gas needs from the North Sea, nearly double current forecasts, while also transitioning to a more renewable energy system.
OEUK urged authorities to revise the upstream tax framework as the government considers the future of the tax system following the anticipated end in 2030 of the "energy profits levy," which significantly increased rates in 2022. A low-case scenario from Westwood Global suggests remaining UK production may be even lower than government estimates at 2.6 billion boe, attributed to policy choices rather than geological factors.
UK offshore hydrocarbon production currently fulfills over half the nation's energy demands, though crude output is rapidly declining, dropping by 11% annually in 2023 and 2024, averaging 564,000 b/d last year. The discussion on remaining reserves indicates a change in UK strategy, which previously emphasized maximizing economic recovery from the North Sea as a legal requirement until 2021, but has since shifted to incorporate net-zero emissions goals.
Upstream investment has been hampered by high taxes and recent policy uncertainties, including changes in the environmental approval process for new projects due to a court challenge from environmental activists. Despite being in a late stage of exploitation, various companies still have plans to revamp existing fields and develop hard-to-extract heavy oil, potentially connecting to wind farms.
OEUK estimates that the additional production not recognized by the government could be valued at GBP165 billion ($222 billion), leading to significantly increased tax revenues. The UK is expected to still consume 13 billion-15 billion boe of oil and gas even if it meets its net-zero target by 2050, depending on the early-stage implementation of carbon capture and storage projects.
The North Sea Transition Authority, the offshore industry's regulator, declined to comment on figures provided by third parties. Platts recently assessed the Dated Brent benchmark at $78.21/b on June 20.
OEUK urged authorities to revise the upstream tax framework as the government considers the future of the tax system following the anticipated end in 2030 of the "energy profits levy," which significantly increased rates in 2022. A low-case scenario from Westwood Global suggests remaining UK production may be even lower than government estimates at 2.6 billion boe, attributed to policy choices rather than geological factors.
UK offshore hydrocarbon production currently fulfills over half the nation's energy demands, though crude output is rapidly declining, dropping by 11% annually in 2023 and 2024, averaging 564,000 b/d last year. The discussion on remaining reserves indicates a change in UK strategy, which previously emphasized maximizing economic recovery from the North Sea as a legal requirement until 2021, but has since shifted to incorporate net-zero emissions goals.
Upstream investment has been hampered by high taxes and recent policy uncertainties, including changes in the environmental approval process for new projects due to a court challenge from environmental activists. Despite being in a late stage of exploitation, various companies still have plans to revamp existing fields and develop hard-to-extract heavy oil, potentially connecting to wind farms.
OEUK estimates that the additional production not recognized by the government could be valued at GBP165 billion ($222 billion), leading to significantly increased tax revenues. The UK is expected to still consume 13 billion-15 billion boe of oil and gas even if it meets its net-zero target by 2050, depending on the early-stage implementation of carbon capture and storage projects.
The North Sea Transition Authority, the offshore industry's regulator, declined to comment on figures provided by third parties. Platts recently assessed the Dated Brent benchmark at $78.21/b on June 20.