Britain will rely on foreign oil and gas imports by 2030 unless investment is secured

At least 80 per cent of Britain’s gas supplies and 70 per cent of oil must be sourced from abroad by 2030, a UK oil and gas trade body said on Tuesday, unless there is investment to boost North Sea output.

Offshore Energies UK (OEUK) said major investment is needed to offset a reliance on imports after Norway became the leading supplier of gas to Britain last year – the first time a single country has become the primary source.

Deirdre Michie, chief executive of Offshore Energies UK, said Britain’s overall oil and gas production will fall by up to 15 per cent a year unless there is rapid investment in new infrastructure.

“This decline is much faster than the predicted reduction in UK energy demand so, if there is no such investment then, by 2030, we will be reliant on other countries for at least 80 per cent of our gas and 70 per cent of our oil,” Ms Michie said.

“That gap will have to be filled by imports, meaning the UK will become ever more dependent on other countries.”

This reliance on imports is already happening, according to OEUK’s 2022 Business Outlook Report, after Norway's flows of natural gas exceeding Britain’s supply from its own continental shelf.

Energy security is a key political challenge following Russia's invasion of Ukraine, and while Norway is a “reliable” source to import from, the country also has other customers it is committed to, the body said.

While 10 oil and gasfields are expected to start up in the UK in 2022 and early 2023, total gas supplies from the UK North Sea fields – net of volumes consumed by producers themselves – are expected to be between 28 billion and 30 billion cubic metres this year, according to OEUK.

That compares with 29 billion cubic metres in 2021, a sign that output is stagnating.

In comparison, Norwegian gas supplies to Britain exceeded 32 billion cubic metres last year, accounting for 64 per cent of the UK’s imports, the report showed.

Investment in Britain’s oil and gas sector has dropped sharply in the past decade and is expected to be about £4 billion this year, a significant drop on the £16bn a year in 2014 and £5.5bn in 2019, OEUK said.

Main drivers of the decline include major producers shifting away from fossil fuels as the UK transitions to net zero and an ageing UK basin, as well as a lack of support from the government, OEUK said.

Producers are urging the government to back the oil and gas industry with stable, long-term policies, as surging energy prices cause misery for householders who are facing much higher energy bills.

The Labour party is calling for a windfall tax on energy companies. However, it has also stressed the need for global investment in energy to increase supplies.

While the International Energy Agency has proposed a “no new investment” strategy around the world for the oil and gas sector, OEUK said failing to open up new oil and gas resources would make the UK and other countries “increasingly reliant on Russia and Opec member states”.

“It would push their share of the global oil supply market from 37 per cent now to 52 per cent by 2050. This has obvious implications for UK energy security,” Ms Michie said.

This can be avoided, however, by tapping resources in the North Sea, which still has more than 11 billion barrels of reserves – enough to meet UK demand for 13 years at current rates, she added, particularly during the transition to a net zero future.

“There is still enough oil and gas under our waters to maintain supplies during the transition to net zero,” Ms Michie said.

Last year, the UK consumed 76 billion cubic metres of gas, with 32 billion cubic metres of this coming from Norway, while 29 billion cubic metres came from the UK continental shelf.

With 45 million tonnes of oil produced in 2021, overall output was down by 17 per cent on 2020 and by 20 per cent on 2019.

“The energy gap between what we produce ourselves and that which comes from other nations will keep growing unless we invest in exploration and production on the UK's continental shelf,” said Ross Dornan, OEUK’s market intelligence manager.

“We must also accelerate the development of cleaner energy like hydrogen. Investment now will give us energy security in the years to come.”

Ms Michie said there is also great potential for wind.

“The government wants the current 10 gigawatts of offshore wind generation capacity to expand fourfold – meaning we must install about 3,000 more turbines by 2030,” she said.

“Electricity, however, accounts for only a fifth of the UK’s energy consumption. The UK has had some success in decarbonising power generation but the central roles of oil and gas in transport and heating have changed little since 2000,” Ms Michie said.

“It means mass hydrogen production, plus carbon capture and storage, must also come of age, alongside other measures to decarbonise transport and industry.”