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(continued)

The Labour government has said that from 2030, when the EPL expires, additional tax will only be levied on revenues on oil sold above $90 a barrel and gas at 90p a therm.

“What has replaced the EPL is a very pragmatic system which will work for all parties,” said James Midgley, an oil and gas research analyst at Cavendish, adding that companies could start investing from 2027 in order to start production in 2030.

Copeland said Serica would target “quick and easy” opportunities for now, saying there were “probably things companies can do that are economically sensible and good for our shareholders”. But he also said the UK government had “missed a trick” by using the North Sea to drive economic growth.

But Cook at Harbour said the UK remained a hostile environment for oil and gas investment. Recent projects such as Equinor’s Rosebank development and Shell’s Jackdaw field have been hit by legal cases and the government has yet to rule on whether they can proceed.

“Every other country, when I visit, asks us what they can do to encourage us to invest more. In the UK, the discussion always feels like the opposite. I continue to struggle to understand why, as long as the UK needs oil and gas, it does not choose to be supportive of producing it domestically,” said Cook.

The UK government said it had set out a plan to build a “prosperous and sustainable future for the North Sea — with record investment to grow clean energy industries, while supporting the management of existing oil and gasfields” during the transition to green energy.

“We know oil and gas will be with us for decades to come, which is why a new permanent windfall tax will replace EPL when it ends, giving the sector and its investors the long-term certainty to plan, invest and support jobs.”

Exploration falls to lowest level since oil and gas were discovered in UK Basin 60 years ago

https://www.ft.com/content/abc3c550-c657-47ac-977c-64f818abf9f5

Oil and gas industry suffered its worst ever year for exploration in 2025, with investment set to plunge further, as companies shelved plans in the North Sea while they waited for clarity on the government’s tax plans.

Wood Mackenzie, the energy consultancy, said no exploration wells were drilled in UK waters this year, the first time there has been no fresh exploration activity in the basin since oil and gas was found there in the 1960s.

Investment, which was £4.4bn in 2025, is set to fall more than 40 per cent to just over £2.5bn next year, marking the lowest level since the UK oil industry was buffeted by high costs, industrial strife and rampant inflation in the early 1970s.

“Drilling is at an all-time low,” said Gail Anderson, Wood Mackenzie research director for the North Sea, who expects the number of North Sea operators to shrink further as consolidation continues, driven by a headline tax rate of 78 per cent.

While there was no new exploration, 36 appraisal and development wells were drilled in the North Sea, although this is half the figure for 2020, the first year of the coronavirus pandemic.

“Activity was terrible in 2025 because there was so much uncertainty,” said Martin Copeland, chief financial officer at North Sea oil and gas producer Serica.

However, executives and analysts said that while 2025 and 2026 likely marked a nadir, investment in UK waters would pick up in anticipation of a more generous tax regime that starts in 2030.

The UK North Sea is in long-term decline, with production falling from a peak of about 2.3mn barrels of oil a day in 1983 to 530,000 b/d, according to government data.

The oil majors that once operated there have sold down, merged their assets or exited entirely to pursue more lucrative opportunities, leaving the basin in the hands of smaller independent companies.

The industry blames the energy profits levy (EPL), introduced by the previous Conservative government in 2022, for accelerating the fall. The levy imposes an additional 35 per cent tax on profits when oil prices exceed $76 a barrel or gas prices go above 59p a therm.

Oil has traded below the threshold for most of 2025, but gas exceeded 140p a therm early in the year and has remained well above the level that triggers the levy.

Official forecasts show that EPL tax receipts are set to plunge from £2.9bn in 2024-25 to £300mn in 2029-30, as companies optimise their tax strategy or leave the basin.

“It’s the worst of the fiscal environments among all the countries that [we] operate in,” said Linda Cook, chief executive of Harbour Energy, one of the North Sea’s largest producers, adding that the UK industry was competing with “one arm tied behind its back”.

Discoveries suggest region has wealth of energy as Labour shuts down activity

https://www.telegraph.co.uk/business/2025/12/24/norway-strikes-oil-in-north-sea-near-british-waters/

Norway has announced a string of North Sea oil and gas discoveries close to UK waters.

British operators Harbour Energy and Aker BP have both made recent finds in the Norwegian North Sea close to the border with UK waters. It suggests that the region still has a wealth of potential even as Labour shuts down activity.

Norway’s Okea has discovered more oil in a field slightly closer to Norway. Meanwhile, a wildcat well drilled by state energy firm Equinor was also successful, discovering seven million barrels.

In a new report, the Norwegian Offshore Directorate described the North Sea as “the powerhouse of the Norwegian petroleum industry, with 69 fields in production”. Norway has drilled around 45 exploratory wells in 2025, with 12 yielding commercial quantities of oil and gas. This included 30 in the North Sea of which six were economic.

Norway has drilled around 45 exploratory wells in 2025, with 12 yielding commercial quantities of oil and gas. This included 30 in the North Sea of which six were economic.

Its discoveries are in stark contrast to the UK sector of the North Sea, which has been hit by the Government’s 78pc total tax rate on oil and gas profits and a ban on new exploration.

The energy levies means the UK industry is now in recession, contracting at around 15pc a year and losing 1,000 jobs a month according to trade body estimates. In October, companies operating in UK waters produced oil and gas equivalent to 33 million barrels of oil, just a fifth what it was producing in 2000 and a quarter of Norway’s current monthly output of 126 million barrels.

Ed Miliband, the Energy Secretary, argues that the UK’s North Sea is in inexorable decline and the country must break its reliance on fossil fuels. Some industry experts disagree, saying the UK will need oil and gas for decades to come and North Sea reserves could supply much of the country’s needs.

Claire Coutinho, the shadow energy secretary, said: “Norway is creating jobs, investment, and tax revenue that we’re missing out on in Britain. Making ourselves more dependent on foreign imports while refusing to drill our own resources will be remembered as the biggest act of economic self-harm in a generation.” In contrast to the British policy, Norway’s official oil and gas policy aims to “provide a framework for the profitable production of oil and gas in the long term”. The latest discovery, by Harbour Energy last week, opened up a new gas condensate field about 125 miles north-east of Shetland. Another oil discovery by Aker BP lies just over the UK/Norwegian border.

Each of the new fields is relatively small, but together they boost Norway’s output cheaply because they can be linked to existing subsea pipelines and other infrastructure.

Https://www.energyvoice.com/oilandgas/north-sea/588340/three-wise-men-cause-energy-sht-show-says-rmt/

.................

The RMT hit out after reflecting on energy policy since Labour came to power last year.

This has included lifting a de-facto ban on onshore wind, which some argue has served as little more than a token gesture.

It established Great British Energy (GB Energy), appointed its chairman Jürgen Maier, appointed Dan McGrail as chief executive, and announced the state-backed body would set up shop in Aberdeen.

However, GB Energy’s permanent Granite City headquarters has yet to materialise, and the firm’s budget was cleaved away at when Miliband allocated funds to GB Nuclear, which most recently appointed former Shell bigwig Simon Roddy as its man at the helm.

The oil and gas sector stalled investment as it waited for a budget most people in the sector predicted the outcome of, even before the Office for Budget Responsibility fumbled by releasing documents before Reeves had a chance to bring the red briefcase to Westminster.

The allocation round (AR) that Miliband touted as a return for offshore wind proved inefficient to many as Ørsted shelved its Hornsea 4 project, which had claimed a successful bid. And looking ahead to next year’s AR7, renewables players have said there isn’t enough cash in the pot to drive the investment Westminster needs if it wants to meet 2030 targets.

Meanwhile, there have been swathes of job losses in the North Sea – no doubt the union’s main concern in all of this.

The union pointed to an article it wrote last Christmas, titled “Things Can Only Get Better”, and lamented how inaccurate it deemed that statement to be.

RMT continued: “Well, far from getting better, things are worse than we could ever have imagined.”

The union has not been alone in its opposition to Labour’s energy tactics.

It joins a long list of organisations attempting to hold Starmer and Co accountable.

Trade bodies Offshore Energies UK and Scottish Renewables called for changes in the budget that fell on deaf ears.

Aberdeen and Grampian Chamber of Commerce has long since battled against the ever-controversial windfall tax imposed on North Sea operators.

And businesses have threatened to divert investment, with the UK’s largest producer of oil and gas, Harbour Energy, making good on threats while announcing 350 job cuts this year.

RMT admitted: “We got it wrong, end of, but in our defence did anyone see this sh*t-show coming?

“We openly admit we got it WRONG, it’s time those in power did likewise, time to accept you have got it WRONG!

“There is still time to turn this around and give the workforce that has been the engine of this country for fifty years plus, a genuine ‘Just Transition’.”

(continued)

That means suppliers — in particular, of cables and wind turbines — have Britain over a barrel.

The resulting tension will be on full display in the latest auction round for renewables, which is now under way. The government needs a huge expansion in wind power to hit its 2030 target. But at today’s prices that means billions more in subsidised guarantees. So either Ed misses his target, or we all pay more. Especially since he has sweetened the deal by increasing the subsidy period from 15 to 20 years — a huge hidden cost to the taxpayer.

The rationale for all this is to shield Britain from spikes in global gas prices. But as the Tories have pointed out, it’s the equivalent of moving from a variable-rate mortgage to a fixed-rate that’s twice the price. Yes, it’s more secure, but it’s still a bad deal.

That’s not the only problem, though. One of the big reasons we’re building all those new wind turbines is to power electric cars. To give the sector a shove, Ed toughened up the existing mandate for electric vehicle adoption: now, new petrol and diesel cars will be withdrawn from sale in 2030, with hybrids following in 2035. This is accompanied by heavy fines for carmakers if they don’t sell enough EVs: 28 per cent of sales this year, rising to 80 per cent by 2030.

The problem is, people aren’t buying enough EVs — and when they are, they’re increasingly tempted by the cheap ones from China. So the government is set to fine our carmakers for not torching their revenues and market share fast enough. Faced with the same problem, the EU is planning to delay its own fossil fuel ban from 2035 to 2040 — leaving Britain increasingly isolated.

And as if that weren’t enough, there’s another problem. Britain, like many other countries, is pinning its hopes on AI and data centres for growth — hence all the tech bigwigs who accompanied Donald Trump on his recent state visit. But as we’re already seeing in the US, that will mean higher electricity demand, and hence prices. In fact, a new report predicts that Norway, whose gas and hydropower we buy in huge quantities, could shift towards importing rather than exporting electricity as demand takes off — another headache for Britain. And that’s without mentioning the continuing assault on North Sea oil and gas, or the biomass boondoggle, or so much more.

One of Ed’s favourite topics is the “energy trilemma” (you can see why the fangirls swoon). This is the idea that you want energy to be cheap, secure and green, but can’t have all three. His argument is that thanks to Labour, Britain can and will. But as his plans run into the realities of the energy markets, that is looking like the biggest lie of all.

He wants the future to be cheap, secure and green, but Labour policy is starting to resemble an adolescent fantasy

https://www.thetimes.com/comment/columnists/article/ed-miliband-energy-renewables-f0md9xszv

.........If I started this column by talking about adolescent fantasies, it’s because that’s what Britain’s energy policy increasingly resembles.

Let’s start at the beginning. The bedrock of Labour’s policy agenda — the core of its “missions” for government — was to make Britain a “clean energy superpower”. This was presented as a win-win-win: electricity prices would fall, green jobs would spring up and the planet would be saved.

The problem is, it was a lie. Miliband claimed he would save us all £300 on our energy bills. But that involved comparing against gas prices that were still elevated because of the Ukraine war. In fact the relevant report said that only £44 of the £300 derived from following Ed’s plans.

So how could the government afford to cut bills by £150 in the recent budget? Well, in large part by moving the costs on to our taxes. But don’t worry! Ed is still promising that shifting from gas to wind will make bills come down. Indeed, once he got into power, he commissioned Neso — the National Energy System Operator — to prove that his plans would save money. On its publication, he said the report confirmed they would “lead to lower costs of electricity”.

But that was another lie. In fact the report only said that Miliband’s plans would not raise bills. And then only by deploying a range of statistical dodges, including taking independent experts’ worst-case scenario for gas prices and treating it as a central forecast — a piece of trickery which Miliband has never acknowledged, let alone apologised for. Indeed last week natural gas prices fell below the lowest range those rigged figures claimed they would go.

Neso has now produced another report. It says that dashing towards renewables probably will save us money. From about 2045. Before then, going slower will be significantly cheaper — very significantly cheaper, if gas prices continue to fall. And even then the cost comparisons are skewed towards renewables by including a carbon price that’s six times the actual market rate (though the Treasury’s accounting rules are to blame for that one).

So what’s gone wrong for Ed?

At the heart of his plan to decarbonise the electricity grid by 2030 is the claim that renewables are cheap and getting cheaper. But that idea, like the Milifandom, is so 2010s. Or rather it’s still true of solar power — but not of wind. And Britain is, famously, rather more windy than sunny. (Plus, of course, you still need backup supply for when the wind doesn’t blow.)

To make matters worse, Miliband’s 2030 target has flipped the dynamics of the market. Because the overriding objective is not to bring bills down: it’s to decarbonise. That means suppliers — in particular, of cables and w

(continued)

Lesson two is that declining demand growth in an energy industry doesn’t mean prices and volatility fall. As the industry shrinks, investment in supply declines due to uncertainty, causing price rises and volatility for consumers still dependent on the commodity. For whale oil, imports began falling in the 1850s, but prices remained volatile and only normalised after 50 years.

Since 1859, much infrastructure has been built on hydrocarbons, shaping energy, transport and economies. Though technological innovation is faster today, switching to alternatives such as solar or nuclear at scale won’t happen overnight — or even within 25 years — to significantly alter the energy mix. Moving away from hydrocarbons soon is unlikely, especially as emerging economies remain fossil fuel dependent. Given this uncertainty, can we at least estimate future oil demand?

Forecasting oil demand by population is imperfect but insightful. Historically, global oil demand growth has tracked population growth, as more people increase energy use for transport, heating, electricity, industry and economic activity. Using UN population projections, oil demand could reach 108.6mn b/d by 2030, 116mn b/d by 2040, and 122mn b/d by 2050, up from about 105mn b/d today. However, climate policies mean this simple model alone is insufficient.

The IEA’s World Energy Outlook offers two potential outcomes: first, a “current policies scenario”, reflecting existing policies, forecasts demand rising to 113mn b/d by 2050; second, a “stated policies scenario”, including broader policies, predicts demand peaking in 2030 then declining to 97mn b/d by 2050.

These represent very different futures for oil. US and European energy companies also have differing views on future demand. Overall, forecasts range from 88mn to 113mn b/d. In my opinion, terminal oil demand will probably be closer to 115mn b/d by 2050. Of course, all this remains educated guesswork. With such uncertainty and divergent views, adaptive thinking is essential for energy demand outlooks.

The writer is head of FIC and commodities research at Société Générale

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