Insight
Is fiscal and political uncertainty set to shut down the North Sea?
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
The case for more UK oil and gas is strong but fiscal and political uncertainty is wreaking havoc on investment plans. The list of companies pulling investment is growing and the prospect of a new Labour government has left the industry at gridlock. Key takeaways from our analysis include: The UK will continue to be a net importer of oil and – particularly – gas, regardless of scenario UK emissions intensity is lower than most import alternatives and five times lower than LNG Most ‘sanction ready’ greenfield projects fail to clear industry hurdle rates under Labour’s vision 1.7 billion boe, US$30 bn investment and US$170 bn of GVA is at risk of being left on the table Investment – already at historical lows – could fall below US$1bn p.a. by 2027 The Government should accelerate plans for a full review of the fiscal system and centre this around two crucial pillars
Table of contents
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Executive Summary
- The case for new UK oil and gas
- What’s left to play for?
- Introduction – and extension – of Energy Profits Levy negatively impacts most new projects
- Ongoing uncertainty puts the UK’s role in the transition at risk
- Is there a solution?
- 1. Replace the EPL with a more predictable windfall-sharing mechanism
- 2. Incentivise investment through holistic tax terms
- What next?
Tables and charts
This report includes the following images and tables:
- UK liquids supply and demand outlook
- UK gas supply and demand outlook
- Intensity of UK oil suppliers (2022)*
- Intensity of UK gas suppliers (2022)*
- Oil & gas supply and demand (2023 – 2050)
- Pre-FID resources: breakeven v emissions
- Response to EPL
- Economics of UK pre-FID projects by fiscal scenario*
- Corporate landscape in the North Sea
- High price royalty example
What's included
This report contains:
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