James Weston is an investor relations professional based in Paris. He studied Economics and Politics at the University of Sheffield and previously worked in the City of London.
Following the outbreak of war in the Middle East, disruption of international energy markets and the subsequent price increases impacting the end consumer, the debate around the issuing of new licenses for oil and gas exploration in the North Sea has reared its head once more.
We’ve even seen the Government move, albeit a little reluctantly, to allow gas exploration in ‘Jackdaw’ – not itself a ‘new licence’.
When my girlfriend and I were discussing the matter, she asked for my opinion on the subject. I straight away answered that I was in favour. But when she questioned me further on my reasoning, I had nothing beyond gut instinct. This prompted this piece.
When studying the subject, I assumed the research would back up my opinion and only entrench my views. However, the more I dug, the more I realised that it is not so clear cut, with convincing points on both sides.
The UK’s oil and gas industry peaked during the 1980s, with tax revenues from the North Sea reaching over 3 per cent of Gross Domestic Product (GDP). Since then the industry’s size has declined significantly and the OBR forecasts that in 2029/2030 tax revenues from the sector will fall to just 0.1 per cent of GDP. With the marginal rate of taxation on production at 78 per cent, reflecting the Energy Profits Levy, stacked on top of normal taxes, though this rate varies with other factors. With total tax receipts in 2024/2025 being £4.4 billion and forecast to be £4.1 billion in 2025/26.
In 2024 oil and gas extraction directly employed 12,000 people with a further 16,000 employed by businesses supporting the extraction, with the majority of these jobs being located in Aberdeen and Scotland. The UK Parliament estimates that between 115,000 to 120,000 jobs are directly and indirectly supported by the industry. Throughout and for consistency, when referencing jobs supported by the industry, I will use the UK Parliament’s figures.
In November 2025, the Labour government published the North Sea Future Plan, in this they committed that they would “not issue new licenses to explore new fields”, arguing that new licenses would have a marginal impact on future production levels of oil and gas.
I will begin by looking at the question from an economic perspective, there are three overlapping questions that need to be answered: would issuing new licenses for oil and gas exploration 1) increase tax receipts 2) impact the economy, 3) create jobs.
Throughout I will use estimates for future North Sea oil and gas production from the North Sea Transition Authority (NSTA). As ever with estimates they are uncertain. Within a new drilling scenario, the NSTA projects gas production to be 44 per cent lower in 2030 and oil production to be 37 per cent lower (compared to 49 per cent lower and 52 per cent lower under the existing policy regime). With even the OEUK, the trade body representing the oil and gas sector, not expecting production to increase in a new drilling scenario, instead estimating production to remain at current levels up until 2034 (as far as their estimates go).
Throughout, where I refer to a ‘new drilling scenario’, I am referring to the NSTA scenario, where additional exploration and development occurs and oil and gas production continues to decline.
It must be acknowledged that the North Sea basin and its oil fields are described as mature and it is in long-term structural decline. So new licenses do not equate to more oil, companies will need to find economically viable oil before extraction begins. Throughout, I am making assumptions that economically viable deposits are found and exploited from the new licenses.
In a new drilling scenario, we can expect tax receipts to continue their long-term decline from the £4.4 billion in 2024/25. However, these figures are relatively immaterial when you take them in the context of a UK government budget of over one trillion.
To understand the economic impact of new licenses, we need to focus on the impact these new projects would have on supply chains, employment and the entire local economy of Scotland and Aberdeen, the centre of the UK’s oil and gas sector.
In a new drilling scenario, direct investment will be dedicated to developing new fields and projects. For example, according to Wood Mackenzie and Voar Energy, if sanctioned the Rosebank project, the UK’s largest undeveloped oil and gas field, would create an estimated £8.1bn of direct investment, of which £6.3bn is likely to be invested in UK based businesses. The Rosebank project is awaiting governmental consent to start drilling and is used here as a proxy for new development.
From this, employment would increase in the short term with jobs required in the building and logistics phases of the projects. These jobs would come after the licenses had been granted and viable oil and gas had been found. Long term employment would then be offered in the running of the projects and extraction.
This extra demand will also rely on the vast supply chains across the UK to support the development of these projects. The UK parliament estimates that around half of the jobs supported by the industry are found in Scotland, focused around Aberdeen and the North East of Scotland.
The amount of direct investment that new licensing could facilitate is not small, especially when taken from the point of view of the local economy of Aberdeen and the Scottish economy.
When focus is concentrated locally, this is where the economic impact is particularly significant. In Aberdeen, direct employment from oil and gas extraction represents around 12.6 per cent of all jobs in the city, with the sector making up over 40 per cent of the city’s total output (latest figures from 2021). If you were to remove the contribution from the oil and gas sector the city’s GDP per capita would fall from around £45k to closer to £26-27k. This is an illustration of the scale of the sector and its importance to the city and the surrounding areas. Although it should not be interpreted as a direct prediction of what the GDP per capita of Aberdeen would be without oil and gas. In this illustration the city moves from being relatively wealthy, to below the UK average.
The next question and counterpoint is, could clean energy offer new employment opportunities and absorb workers from the oil and gas industry? Robert Gordon University estimates that over 90 per cent of the UK’s oil and gas workforce have medium to high transferable skills to offshore renewable roles, and the government expects around 35,000-40,000 extra direct clean energy jobs to be found in Scotland alone by 2030, from between 20,000-25,000 there in 2023.
This looks promising, but these projections of new jobs depend on the government meeting its Clean Power 2030 targets and accelerating the transition to net zero. In June 2026, the Climate Change Committee (CCC), the body which scrutinizes the government’s policy towards net zero, said that the government was “not moving fast enough to reduce greenhouse gas emissions” and called for “greater ambition on electrification”. If the CCC is right, the timeline for these jobs may also be delayed.
It should also be noted that the extra direct jobs are spread across all clean energy sectors, with no guarantee of comparable pay or of how easily oil and gas skills transfer and that no breakdown of the location of these jobs, within Scotland, is given. These projections and numbers sound good, but they are exactly that, projections. With the government also stating that its estimates “do not represent precise predictions”, these communities supported by the oil and gas sector cannot stake their future on models.
To tie the economic argument together, a new drilling scenario won’t usher in a new golden era for North Sea oil and gas and won’t materially impact the tax receipts from the sector. But it can slow the decline of production, and with it the loss of jobs. Clean energy roles may eventually absorb some of the workers from the sector, but this is by no means guaranteed, and the timing, location and pay are uncertain. Issuing new licenses is also uncertain and viable oil must be found, but it makes it possible for the sector to continue to support the local communities that depend on it, particularly in Scotland and the North East of Scotland, while giving the transition time to prove itself.
Moving on to Energy security, it is defined as having a steady, safe and cheap supply of power and fuel. I will aim to answer whether the issuing of new exploration licenses would improve the ability of the UK to obtain energy when it needs it, and be able to insulate consumers from volatile prices.
Firstly, oil and gas extraction in the UK is enacted by private actors and therefore this oil and gas will be sold on the international market at the most advantageous price to the companies. More fundamentally, the UK does not hold “right of first refusal” in the North Sea. Once the government grants the drilling license, the extracted resources belong entirely to the private license holder.
In a scenario where oil and gas cannot be imported, a domestic source might be able to fill the gap, providing physical supply security. However the North Sea’s production is unable to meet the daily demand from the UK. Today, there are only 4 working refineries based in the country, acting as a bottleneck to the supply of oil and gas derivatives around the country. In this scenario, the North Sea would be able to provide a level of supply security to the country, but industry infrastructure would hold it back from being able to keep it fully functioning.
Moving on to look at the impact on global pricing, the North Sea only provides around 1 million barrels a day out of 106 million produced worldwide. Therefore the basin, is unable to meaningfully impact global supply and consequently pricing. So, it would not provide price security to the end customer in the UK.
The idea that a new drilling scenario, would be able to fundamentally alter the UK’s energy security equation, is misplaced, and therefore unconvincing. It would do little to shield consumers from international price volatility, while its benefits in an extreme supply disruption would be limited by domestic production and industry infrastructure.
The strongest counterargument against is the impact it would have on greenhouse gas emissions, the UK’s trajectory towards net zero and the environment. The UK has a legally binding target to reach net zero by 2050 where total greenhouse gas emissions must be equal to the emissions removed from the atmosphere.
The Department for Energy Security and Net Zero found that the UK’s fuel supply sector, which covers domestic oil and gas production, represents around 7% of total yearly UK greenhouse gas emissions (27.3 million tonnes of CO2 equivalent per year in Scope 1 emissions, which are direct emissions from operations). Scope 3 emissions for the sector are estimated at over 200 million tonnes of CO2 equivalent per year (scope 3 takes into account all indirect emissions from a company’s value chain and therefore includes the burning of the extracted oil and gas). Reporting of this by companies is voluntary and therefore this figure is an estimation.
This example illustrates the tension between the two methods of measuring emissions. The sector’s scope 1 emissions appear low as a percentage of the overall yearly national greenhouse gas emissions and could be taken as a green light for new licenses. However scope 3 emissions are much larger and completely change that narrative. In the landmark Finch ruling at the Supreme Court, it was established that the environmental impact assessments for fossil fuel projects must account for scope 3 emissions produced and therefore it is important to try and take both into account.
New licensing and consequent drilling will cause the release of greenhouse gas emissions into the atmosphere. For example, estimates for the Rosebank project over its 25 year lifetime, envisage scope 1 emissions of 4.5 million tonnes of CO2 equivalent and scope 3 emissions of between 250 and 254 million tonnes of CO2. We can see in this real example, the difference between the two methods of measuring greenhouse gas emissions and how these very different views can be drawn from both figures.
However, in a new drilling scenario the North Sea’s production will continue to decline, and both scope 1 and 3 emissions will follow this trend. Furthermore, in a new drilling scenario newer and more efficient projects, will slowly make up the bulk of extraction, and therefore scope 1 emissions will actually fall. An example of this is the planned electrification of the Rosebank project which would reduce its scope 1 emissions by up to 70%, this isn’t expected before 2030 at the earliest (the above figure of 4.5 million tonnes of scope 1 emissions is pre-electrification). Another example would be that Rosebank’s emission intensity per barrel of oil is expected to be half that of the current UK offshore average.
New licensing will cause both scope 1 and 3 emissions from the sector to be higher for longer, than under the current ban, and will not help the UK on its path to net zero. But with new licensing only slowing the decline of the basin’s production and new techniques reducing scope 1 emissions from the sector, it might not delay it as much as expected.
I have tried to take a step back from the politicised arguments and take an analytical look at the whole debate. Focusing on three main topics: the economy, energy security and the environment.
New licenses will have little impact on the UK’s energy security, and therefore does not add weight to either side of the argument. The environmental case provides the strongest argument against. However, the combination of long term production decline and the introduction of new techniques of extraction means both scope 1 and 3 emissions will fall. Therefore, it may not divert the UK off its path to net zero as much as first thought, which diminishes the argument to a certain extent.
The economy, the bedrock of the argument for, is shakier than first assumed, with taxation seeing limited impact. However, the impact on job creation and employment is the crux of the argument. New licenses could create jobs once viable oil and gas is found, and slow the decline of employment from the sector in the medium term, giving the transition time to gather momentum and absorb more of the sector’s workers. The ban on new exploration licenses would likely accelerate the decline of the sector, eventually costing jobs and hitting Aberdeen and Scotland hardest. The UK has seen the historical costs from the loss of traditional sectors. Are we ready to condemn another sector and region to decline?
Overall, this is by no means an emphatic endorsement of the issuing of new licenses for oil and gas exploration in the North Sea. The subject is by no means transformational for the UK. Instead, this decision should be viewed as a pragmatic decision to manage and slow the decline of the industry, giving the transition time to grow and absorb more of the sector’s workers, while continuing to offer a level of protection to the communities and workers that depend on it.
James Weston is an investor relations professional based in Paris. He studied Economics and Politics at the University of Sheffield and previously worked in the City of London.
Following the outbreak of war in the Middle East, disruption of international energy markets and the subsequent price increases impacting the end consumer, the debate around the issuing of new licenses for oil and gas exploration in the North Sea has reared its head once more.
We’ve even seen the Government move, albeit a little reluctantly, to allow gas exploration in ‘Jackdaw’ – not itself a ‘new licence’.
When my girlfriend and I were discussing the matter, she asked for my opinion on the subject. I straight away answered that I was in favour. But when she questioned me further on my reasoning, I had nothing beyond gut instinct. This prompted this piece.
When studying the subject, I assumed the research would back up my opinion and only entrench my views. However, the more I dug, the more I realised that it is not so clear cut, with convincing points on both sides.
The UK’s oil and gas industry peaked during the 1980s, with tax revenues from the North Sea reaching over 3 per cent of Gross Domestic Product (GDP). Since then the industry’s size has declined significantly and the OBR forecasts that in 2029/2030 tax revenues from the sector will fall to just 0.1 per cent of GDP. With the marginal rate of taxation on production at 78 per cent, reflecting the Energy Profits Levy, stacked on top of normal taxes, though this rate varies with other factors. With total tax receipts in 2024/2025 being £4.4 billion and forecast to be £4.1 billion in 2025/26.
In 2024 oil and gas extraction directly employed 12,000 people with a further 16,000 employed by businesses supporting the extraction, with the majority of these jobs being located in Aberdeen and Scotland. The UK Parliament estimates that between 115,000 to 120,000 jobs are directly and indirectly supported by the industry. Throughout and for consistency, when referencing jobs supported by the industry, I will use the UK Parliament’s figures.
In November 2025, the Labour government published the North Sea Future Plan, in this they committed that they would “not issue new licenses to explore new fields”, arguing that new licenses would have a marginal impact on future production levels of oil and gas.
I will begin by looking at the question from an economic perspective, there are three overlapping questions that need to be answered: would issuing new licenses for oil and gas exploration 1) increase tax receipts 2) impact the economy, 3) create jobs.
Throughout I will use estimates for future North Sea oil and gas production from the North Sea Transition Authority (NSTA). As ever with estimates they are uncertain. Within a new drilling scenario, the NSTA projects gas production to be 44 per cent lower in 2030 and oil production to be 37 per cent lower (compared to 49 per cent lower and 52 per cent lower under the existing policy regime). With even the OEUK, the trade body representing the oil and gas sector, not expecting production to increase in a new drilling scenario, instead estimating production to remain at current levels up until 2034 (as far as their estimates go).
Throughout, where I refer to a ‘new drilling scenario’, I am referring to the NSTA scenario, where additional exploration and development occurs and oil and gas production continues to decline.
It must be acknowledged that the North Sea basin and its oil fields are described as mature and it is in long-term structural decline. So new licenses do not equate to more oil, companies will need to find economically viable oil before extraction begins. Throughout, I am making assumptions that economically viable deposits are found and exploited from the new licenses.
In a new drilling scenario, we can expect tax receipts to continue their long-term decline from the £4.4 billion in 2024/25. However, these figures are relatively immaterial when you take them in the context of a UK government budget of over one trillion.
To understand the economic impact of new licenses, we need to focus on the impact these new projects would have on supply chains, employment and the entire local economy of Scotland and Aberdeen, the centre of the UK’s oil and gas sector.
In a new drilling scenario, direct investment will be dedicated to developing new fields and projects. For example, according to Wood Mackenzie and Voar Energy, if sanctioned the Rosebank project, the UK’s largest undeveloped oil and gas field, would create an estimated £8.1bn of direct investment, of which £6.3bn is likely to be invested in UK based businesses. The Rosebank project is awaiting governmental consent to start drilling and is used here as a proxy for new development.
From this, employment would increase in the short term with jobs required in the building and logistics phases of the projects. These jobs would come after the licenses had been granted and viable oil and gas had been found. Long term employment would then be offered in the running of the projects and extraction.
This extra demand will also rely on the vast supply chains across the UK to support the development of these projects. The UK parliament estimates that around half of the jobs supported by the industry are found in Scotland, focused around Aberdeen and the North East of Scotland.
The amount of direct investment that new licensing could facilitate is not small, especially when taken from the point of view of the local economy of Aberdeen and the Scottish economy.
When focus is concentrated locally, this is where the economic impact is particularly significant. In Aberdeen, direct employment from oil and gas extraction represents around 12.6 per cent of all jobs in the city, with the sector making up over 40 per cent of the city’s total output (latest figures from 2021). If you were to remove the contribution from the oil and gas sector the city’s GDP per capita would fall from around £45k to closer to £26-27k. This is an illustration of the scale of the sector and its importance to the city and the surrounding areas. Although it should not be interpreted as a direct prediction of what the GDP per capita of Aberdeen would be without oil and gas. In this illustration the city moves from being relatively wealthy, to below the UK average.
The next question and counterpoint is, could clean energy offer new employment opportunities and absorb workers from the oil and gas industry? Robert Gordon University estimates that over 90 per cent of the UK’s oil and gas workforce have medium to high transferable skills to offshore renewable roles, and the government expects around 35,000-40,000 extra direct clean energy jobs to be found in Scotland alone by 2030, from between 20,000-25,000 there in 2023.
This looks promising, but these projections of new jobs depend on the government meeting its Clean Power 2030 targets and accelerating the transition to net zero. In June 2026, the Climate Change Committee (CCC), the body which scrutinizes the government’s policy towards net zero, said that the government was “not moving fast enough to reduce greenhouse gas emissions” and called for “greater ambition on electrification”. If the CCC is right, the timeline for these jobs may also be delayed.
It should also be noted that the extra direct jobs are spread across all clean energy sectors, with no guarantee of comparable pay or of how easily oil and gas skills transfer and that no breakdown of the location of these jobs, within Scotland, is given. These projections and numbers sound good, but they are exactly that, projections. With the government also stating that its estimates “do not represent precise predictions”, these communities supported by the oil and gas sector cannot stake their future on models.
To tie the economic argument together, a new drilling scenario won’t usher in a new golden era for North Sea oil and gas and won’t materially impact the tax receipts from the sector. But it can slow the decline of production, and with it the loss of jobs. Clean energy roles may eventually absorb some of the workers from the sector, but this is by no means guaranteed, and the timing, location and pay are uncertain. Issuing new licenses is also uncertain and viable oil must be found, but it makes it possible for the sector to continue to support the local communities that depend on it, particularly in Scotland and the North East of Scotland, while giving the transition time to prove itself.
Moving on to Energy security, it is defined as having a steady, safe and cheap supply of power and fuel. I will aim to answer whether the issuing of new exploration licenses would improve the ability of the UK to obtain energy when it needs it, and be able to insulate consumers from volatile prices.
Firstly, oil and gas extraction in the UK is enacted by private actors and therefore this oil and gas will be sold on the international market at the most advantageous price to the companies. More fundamentally, the UK does not hold “right of first refusal” in the North Sea. Once the government grants the drilling license, the extracted resources belong entirely to the private license holder.
In a scenario where oil and gas cannot be imported, a domestic source might be able to fill the gap, providing physical supply security. However the North Sea’s production is unable to meet the daily demand from the UK. Today, there are only 4 working refineries based in the country, acting as a bottleneck to the supply of oil and gas derivatives around the country. In this scenario, the North Sea would be able to provide a level of supply security to the country, but industry infrastructure would hold it back from being able to keep it fully functioning.
Moving on to look at the impact on global pricing, the North Sea only provides around 1 million barrels a day out of 106 million produced worldwide. Therefore the basin, is unable to meaningfully impact global supply and consequently pricing. So, it would not provide price security to the end customer in the UK.
The idea that a new drilling scenario, would be able to fundamentally alter the UK’s energy security equation, is misplaced, and therefore unconvincing. It would do little to shield consumers from international price volatility, while its benefits in an extreme supply disruption would be limited by domestic production and industry infrastructure.
The strongest counterargument against is the impact it would have on greenhouse gas emissions, the UK’s trajectory towards net zero and the environment. The UK has a legally binding target to reach net zero by 2050 where total greenhouse gas emissions must be equal to the emissions removed from the atmosphere.
The Department for Energy Security and Net Zero found that the UK’s fuel supply sector, which covers domestic oil and gas production, represents around 7% of total yearly UK greenhouse gas emissions (27.3 million tonnes of CO2 equivalent per year in Scope 1 emissions, which are direct emissions from operations). Scope 3 emissions for the sector are estimated at over 200 million tonnes of CO2 equivalent per year (scope 3 takes into account all indirect emissions from a company’s value chain and therefore includes the burning of the extracted oil and gas). Reporting of this by companies is voluntary and therefore this figure is an estimation.
This example illustrates the tension between the two methods of measuring emissions. The sector’s scope 1 emissions appear low as a percentage of the overall yearly national greenhouse gas emissions and could be taken as a green light for new licenses. However scope 3 emissions are much larger and completely change that narrative. In the landmark Finch ruling at the Supreme Court, it was established that the environmental impact assessments for fossil fuel projects must account for scope 3 emissions produced and therefore it is important to try and take both into account.
New licensing and consequent drilling will cause the release of greenhouse gas emissions into the atmosphere. For example, estimates for the Rosebank project over its 25 year lifetime, envisage scope 1 emissions of 4.5 million tonnes of CO2 equivalent and scope 3 emissions of between 250 and 254 million tonnes of CO2. We can see in this real example, the difference between the two methods of measuring greenhouse gas emissions and how these very different views can be drawn from both figures.
However, in a new drilling scenario the North Sea’s production will continue to decline, and both scope 1 and 3 emissions will follow this trend. Furthermore, in a new drilling scenario newer and more efficient projects, will slowly make up the bulk of extraction, and therefore scope 1 emissions will actually fall. An example of this is the planned electrification of the Rosebank project which would reduce its scope 1 emissions by up to 70%, this isn’t expected before 2030 at the earliest (the above figure of 4.5 million tonnes of scope 1 emissions is pre-electrification). Another example would be that Rosebank’s emission intensity per barrel of oil is expected to be half that of the current UK offshore average.
New licensing will cause both scope 1 and 3 emissions from the sector to be higher for longer, than under the current ban, and will not help the UK on its path to net zero. But with new licensing only slowing the decline of the basin’s production and new techniques reducing scope 1 emissions from the sector, it might not delay it as much as expected.
I have tried to take a step back from the politicised arguments and take an analytical look at the whole debate. Focusing on three main topics: the economy, energy security and the environment.
New licenses will have little impact on the UK’s energy security, and therefore does not add weight to either side of the argument. The environmental case provides the strongest argument against. However, the combination of long term production decline and the introduction of new techniques of extraction means both scope 1 and 3 emissions will fall. Therefore, it may not divert the UK off its path to net zero as much as first thought, which diminishes the argument to a certain extent.
The economy, the bedrock of the argument for, is shakier than first assumed, with taxation seeing limited impact. However, the impact on job creation and employment is the crux of the argument. New licenses could create jobs once viable oil and gas is found, and slow the decline of employment from the sector in the medium term, giving the transition time to gather momentum and absorb more of the sector’s workers. The ban on new exploration licenses would likely accelerate the decline of the sector, eventually costing jobs and hitting Aberdeen and Scotland hardest. The UK has seen the historical costs from the loss of traditional sectors. Are we ready to condemn another sector and region to decline?
Overall, this is by no means an emphatic endorsement of the issuing of new licenses for oil and gas exploration in the North Sea. The subject is by no means transformational for the UK. Instead, this decision should be viewed as a pragmatic decision to manage and slow the decline of the industry, giving the transition time to grow and absorb more of the sector’s workers, while continuing to offer a level of protection to the communities and workers that depend on it.