Companies say North Sea has long-term future, if government backs industry

The warning comes as the Chamber published its 43rd Energy Transition report, which reveals that 93% of businesses either agree or strongly agree that there is still a future for oil and gas activity in the North Sea if the UK introduces the right fiscal and regulatory frameworks.

The findings directly challenge the growing political narrative that the future of the basin is already decided. The report argues that confidence in the UK Continental Shelf (UKCS) remains historically weak not because of a lack of opportunity or capability, but because of continued fiscal instability, planning delays, transmission charging and slow project consenting. Businesses repeatedly warned that investment is continuing to flow overseas at pace while the UK struggles to create the conditions required to compete for capital, skills and industrial capability.

Key findings from the report show that 93% of respondents believe there is still a future for North Sea oil and gas activity under the right fiscal and regulatory conditions. Respondents identified grid constraints, planning delays, transmission charging and consenting complexity as major barriers slowing offshore wind and wider transition projects. 67% of respondents believe that planning decisions about important onshore grid infrastructure should be made by the Scottish Government, rather than local authorities. 89% support new licences and consents where operators can demonstrate lower emissions than imported alternatives and deliver greater UK economic value.

The report argues that while businesses continue to diversify into offshore wind, carbon capture, electrification and wider decarbonisation activity, delays to infrastructure and policy uncertainty are creating a growing ‘transition gap’ between declining traditional activity and the pace at which replacement industries are scaling. The Chamber says the findings demonstrate the urgent need for a more competitive and stable policy environment if the UK is to retain the workforce and industrial capability required to deliver both energy security and net zero.

The report makes four recommendations. Firstly, that there should be a level playing field established between UK domestic production and imported LNG through a more balanced approach to life cycle emissions and consenting of new North Sea projects, such as Jackdaw and Rosebank. The second recommendation is to replace the Energy Profits Levy with the Oil & Gas Price Mechanism from 2026 to restore long-term fiscal stability and investor confidence. The third is to reform Transmission Network Use of System (TNUoS) charging to improve the commercial viability of offshore wind and electrification projects in Scotland. The final recommendation is to accelerate planning, consenting and grid delivery to reduce delays to nationally significant energy infrastructure.

Aberdeen & Grampian Chamber of Commerce chief executive Russell Borthwick said, “For several years now, the dominant political narrative has increasingly suggested that the future of the North Sea is already decided. This report tells a very different story. The overwhelming majority of businesses operating across the energy sector still believe there is a future for the basin if the UK creates the right fiscal and regulatory conditions to support it. What companies are questioning is not the capability of the North Sea, but whether the UK is still competitive enough to attract the investment required to deliver that future. 

“The North Sea remains one of the UK’s greatest industrial assets. The same workforce, engineering expertise and supply chain capability built over the last five decades will also be critical to delivering offshore wind, carbon capture, electrification and wider transition infrastructure. But investment follows stability, and right now too many businesses believe the UK is losing ground to international competitors offering clearer policy, faster consenting and more predictable long-term conditions. The message from industry is becoming increasingly clear - you cannot deliver energy security, economic growth and the energy transition while simultaneously hollowing out the industrial base required to achieve all three.”

Johnston Carmichael Aberdeen office managing partner David Wilson said, “This year’s findings reinforce the growing disconnect between the long-term opportunity which still exists across the North Sea and the level of confidence businesses currently have in the UK as a place to invest. The northeast of Scotland retains one of the most highly skilled energy work forces anywhere in the world alongside decades of globally recognised offshore engineering expertise. These are precisely the capabilities required to deliver the next generation of energy infrastructure.

“The findings also reinforce the growing industry view that this should not be framed as an ‘either/or’ debate. Most businesses recognise the need to accelerate lower-carbon technologies while also recognising the continuing importance of domestic oil and gas production, energy security and industrial competitiveness during what will inevitably be a multi-decade transition. What industry is ultimately seeking is confidence that the UK remains an attractive place to invest, innovate and build long-term energy capability.”