By Alex Kimani – Jan 25, 2026, 4:00 PM CST
- UK North Sea investment is set to slump sharply, with Wood Mackenzie forecasting UK upstream capex to fall below $3.5 billion in 2026.
- Claims of vast remaining reserves are overstated, as regulators like the North Sea Transition Authority estimate just ~2.9 billion boe left, with Wood Mackenzie warning this could be the last year UK production exceeds 1 million boe/d.
- A widening UK–Norway divide is emerging, with Norway maintaining strong spending and exploration under stable policies, while the UK sees falling activity
Recently, U.S. President Donald Trump claimed that the UK has 500 years of oil reserves left in the North Sea, and blamed the country’s high energy prices on the government’s unwillingness to drill. However, the unfortunate fact is that the North Sea oil and gas sector has been in a significant and prolonged decline due to the basin’s aging oil fields, with production falling sharply since its peak in the early 2000s. According to the North Sea Transition Authority (NSTA), the UK’s energy regulator, the North Sea had ~2.9 billion barrels of oil equivalent at the end of 2024, suggesting only decades of supply, not hundreds of years as Trump claims.
Indeed, WoodMac has predicted that the current year could be the last time the UK will produce over 1 million boe/d from the North Sea.
The North Sea decline has led to reduced investment, job losses, and increased UK reliance on imports, despite ongoing efforts to manage the energy transition. Meanwhile, high taxes and policy uncertainty, particularly the Energy Profits Levy, have been deterring new projects, accelerating consolidation, and shifting focus towards offshore wind. The UK Energy Profits Levy (EPL) is a temporary “windfall tax” with a headline rate of 78% on exceptional profits on UK oil and gas producers that was introduced in 2022 during the global energy crisis. EPL is set to end by March 2030, but will be replaced by a permanent, revenue-based Oil and Gas Price Mechanism (OGPM) from 2030, applying a 35% charge when prices are high, using thresholds like $90/barrel oil and 90p/therm gas. The EPL has been a point of contention for the industry due to its negative impact on investment.
Related: Geopolitics Override Fundamentals as Oil Extends 2026 Rally
According to a new report by Wood Mackenzie, the North Sea upstream oil and gas sector in 2026 will be shaped by falling investment (particularly in the UK), continued M&A activity, regional divergence in Norway and the UK, ongoing energy transition pressures, and a strong focus on capital discipline as well as improved operational efficiency.
Here are five key North Sea upstream themes to look out for in 2026:
#1. Diverging Investment and Activity Levels
Investment in the North Sea upstream sector is projected to fall overall in 2026, driven by a significant decline in UK investment to less than $3.5 billion,