'Serious implications' as companies fail to invest in North Sea
However, analysis by the climate group Uplift found that 74% of North Sea oil and gas companies plan to invest solely in fossil fuels between now and 2030, with 12 of 87 companies active in the basin not planning to invest anything at all.
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Their analysis was conducted using Rystad Energy estimates, supplied between April and June 2024, for capital expenditure across offshore oil and gas, renewables, hydrogen, and CCUS between 1990 and 2030.
Just two oil and gas companies operating in the North Sea plan to transition to majority (more than 50%) renewable investment by 2030, and according to the research since 2015, just six offshore oil and gas companies have invested anything in UK renewable energy projects.
Uplift warns that failure to invest in renewables as supplies of oil and gas dwindle will have a disastrous effect on workers, companies in the energy supply chain, and communities currently dependent on the oil and gas sector.
Following the collapse of the UK’s mining industry there was “evidence of large and persistent earnings losses” even 15 years later, according to a report by the Institute for Fiscal Studies.
Between 1980 and 1994, more than 200,000 miners lost their jobs, a drop in the workforce of 90%, with “severe and persistent negative impacts on employment and participation rates, population and living conditions in the affected mining communities”.
A report earlier this year found that the population of Cumnock and the Doon Valley, traditionally a mining area, had declined by 20% over the past 40 years, and is expected to drop by another 7% by 2028.
Tessa Khan, executive director at Uplift said: “The oil and gas industry is clearly failing to deliver on its promises. The overwhelming majority of North Sea operators have no intention of investing in clean energy and are solely interested in profiting from oil and gas for as long as the North Sea’s dwindling reserves allow.
“Yet the industry continues to position itself as a major partner in the UK’s energy transition – a fiction that, to this point, has allowed it to play a pivotal role in determining the shape and pace of the North Sea’s transition.
“This pretence is leading to real world consequences for supply chain firms, oil and gas workers and the communities they support. Over the past decade, as the basin has declined, the number of jobs supported by the industry has more than halved, and opportunities from the transition for supply chain companies have failed to materialise.
“It is now for policy makers to recognise that the lack of low carbon investment plans by the majority of oil and gas companies reduces them to minor players in the UK’s future energy system, which should be reflected in a corresponding decline in their influence over public policy.
“Government urgently needs to take responsibility for managing the North Sea’s future out of the hands of an industry that is very clearly on a different path to the one that it advertises, and instead come up with a genuine transition plan that has the needs of supply chain businesses, workers and their communities at its core.”
It comes after Robin Allan, chairman of the Association of British Independent Exploration Companies; David Whitehouse, chief executive of Offshore Energies UK; and Gary Smith, the GMB’s general secretary wrote a joint letter in The Times calling on the UK Government to avoid the “real prospect of a cliff-edge for investment, production and jobs”.
They said “the UK will need oil and gas in our future energy mix” and warned “industry and independent reports suggests that fiscal plans for the offshore sector could see tens of thousands of job losses by 2030”.
They called for better co-operation between government, industry, and unions as the country looks to move to clean energy.
A spokesperson for the Department for Energy Security and Net Zero said: “The government has a non-negotiable commitment to securing a proud future for the North Sea and we are engaging with industry, workers, trade unions and civil society to provide certainty through a phased and responsible transition.
“Our National Wealth Fund and Great British Energy will work in lockstep with industry to unleash private investment — helping create thousands of jobs in clean energy to boost our energy independence.”