The amount of economically viable oil and gas from the North Sea has declined rapidly since its peak at the turn of the century. Output peaked around 2000, when the basin produced 4.4m barrels of oil equivalent a day. By 2030, it will produce just 15% of that peak, according to projections. Despite this decline, North Sea oil remains a symbol of prestige and a rich resource for political debate.
From discovery to national icon
Oil was first discovered off the north-east coast of Scotland in September 1969. Industry folklore has it that the duty superintendent on the rig poured it into a pickle jar and took it to Amoco's Great Yarmouth office in Norfolk, where it was emptied into an ashtray, sniffed and set alight. From that modest start, North Sea oil emerged as a driving force of the British economy and a symbol of national power and renewal as the UK emerged from the Opec oil crisis.
By 1977, Labour prime minister Jim Callaghan declared: "God has given Britain her best opportunity for 100 years in the shape of North Sea oil." A subsequent white paper said it offered "a unique opportunity for Britain to improve her economic performance, raise her living standards, move forward to full employment, and develop a socially just society". A decade later, the basin became central to Margaret Thatcher's political project, with its revenues approaching 10% of the UK's total tax take at times, supporting tax cuts and privatisation.
During the boom years, North Sea oil directly employed about 120,000 people and supported hundreds of thousands more indirectly. Data from the Office for National Statistics suggests that figure has dropped to about 27,000 direct employees. Many of the biggest oil and gas corporations have left as stocks dwindle – BP was the latest, announcing this summer an end to six decades in the basin.
Political battles over drilling
In the run-up to the 2024 general election, Labour announced there would be no new exploratory licences for oil and gas in the North Sea. In 2021, the International Energy Agency had said there could be "no new investments in oil, gas and coal" if the world was to avoid the worst impacts of the climate crisis. The then energy secretary, Ed Miliband, argued that a rapid transition to cleaner energy systems would help tackle the climate crisis and make the UK a "clean energy superpower".
However, the plans are once more at the centre of a political storm. Reform UK leader Nigel Farage and Conservative leader Kemi Badenoch have called for a massive expansion of drilling, claiming they would reverse the ban on new licences if elected. Donald Trump has also claimed the basin is "one of the greatest reserves anywhere in the world … with 500 years of oil and gas reserves left".
Steve Pye, a professor of energy systems and deputy director of the Energy Institute at University College London, said: "The North Sea basin has been in decline since 2000. There are no credible prospects of reversing this." Experts point out that energy prices are set globally and there is not enough oil or gas in the North Sea to have any impact on UK bills. Most of what remains is oil that goes abroad to be refined and sold on international markets. A Carbon Brief study found that gas extraction from the North Sea is forecast to drop 99% by 2050 without new licences, compared with 97% if new licences were awarded.
On employment, the campaign group Uplift points out that the number of jobs supported by the oil and gas industry has more than halved in the last decade – from 441,000 to 214,000 today – despite previous governments issuing hundreds of new licences. On tax, critics question the benefit once state subsidies to oil and gas companies are taken into account.
Transition to renewables
In October last year, the UK government unveiled plans for an extra 400,000 jobs in the green economy over the next five years. Miliband said the government planned to double the number of people working in green industries by 2030. The green economy already supports a million jobs and higher wages, with nearly half a trillion pounds of further investment in the pipeline, according to a report from the Confederation of British Industry.
Windfarms in the North Sea generate about 18% of the UK's total electricity. In 2025, renewables provided 50.4% of the UK's electricity, compared with 31.8% from fossil fuels. However, unions representing oil and gas workers say the transition is not delivering the secure long-term jobs that were promised, and they have been vocal about their support for more drilling.
Connor Watt, of Platform, which works with current and former oil workers, said: "The three main wins from the transition to renewables should be jobs, cheaper energy and income from electricity generation that can be used to bolster public finances, to help local communities. But at the moment, despite huge renewable projects going ahead, none of those three things have materialised and people are beginning to wonder why."
Campaigners look to Norway, which set up a sovereign wealth fund when it discovered oil and gas in the North Sea. It is now worth more than $2tn – the biggest fund of its kind in the world. Analysts say that if the UK had taken a similar approach, a UK sovereign wealth fund could be worth about £850bn now. Watt said the UK's market-led approach has seen the vast majority of the benefit flow into the profits of global corporations rather than local communities.
Tessa Khan, director at Uplift, said it was "a dangerous fantasy" to talk up the potential of North Sea oil as a fix for Britain's problems. "After 50 years of drilling, the fact is the UK has burned through most of its gas reserves, while most of what remains is oil that is largely exported." She added: "The lesson of the past five years is clear: the best protection against global energy shocks is accelerating renewables and helping households and businesses switch to clean electricity."
The debate about North Sea oil and gas extraction looks set to rumble on, even as its economic significance dwindles. Watt said: "The real question policymakers and local communities must grapple with now is: can the UK capitalise on the renewable energy revolution? And if it does, will it be the workers and communities across the UK who benefit, or corporate profit margins?"
