Felicity Bradstock
Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.
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By Felicity Bradstock – Oct 05, 2025, 2:00 PM CDT
- Labour is raising taxes and environmental standards on North Sea oil and gas while refusing to issue new licences, but insists hydrocarbons will remain part of the UK’s energy mix.
- Wood Mackenzie research suggests up to 14 billion barrels of recoverable reserves may remain, far higher than regulator estimates, fuelling debate over future drilling.
- The government is pushing for a just transition toward renewables while the Conservatives promise to remove net-zero requirements and maximise North Sea extraction.
Since the Labour Party came into office in the U.K. last year, many have wondered if oil and gas drilling will continue or whether we will witness an all-out shift to renewable energy. Prime Minister Kier Starmer has introduced stricter taxes on fossil fuel companies since coming into power, but has also said that oil and gas will continue as part of the energy mix for as long as it makes sense. So, as the investor environment in the U.K. North Seas becomes ever murkier, what can we expect?
In June, the U.K. government introduced stricter environmental regulations for fossil fuel companies with projects in the North Sea. Oil and gas firms must now account for the environmental impact of emissions from using or burning the fuels extracted. This follows a decision by a Scottish court earlier in the year, deeming the approval of Shell’s Jackdaw and Equinor and Ithaca Energy’s Rosebank unlawful, meaning they required reassessment by the government.
While existing oil and gas projects can continue in the North Sea, albeit with companies paying higher taxes, the government has said it would not issue any new oil and gas licences, as it invests in a shift to green. This marks a distinct move away from the energy policy of the previous Conservative government, which strongly backed U.K. oil and gas operations. Oil and gas companies operating in the North Sea are taxed at around 78 percent, including the Energy Profits Levy introduced in 2022.
During his recent visit to the U.K., United States President Donald Trump discussed the country’s oil and gas potential. Trump said, “You have a great asset here, and we spoke about it: it’s called the North Sea.” He added, “The North Sea oil is phenomenal… I want this country to do well, and you have great assets that you’re going to start using, I believe, under this Prime Minister,” addressing Starmer. He said that his pro-fossil fuel agenda in the U.S. had helped drive down fuel prices and slowed inflation – even though fuel prices have actually risen since Trump came to office.