The UK risks inflicting “economic self-harm” by accelerating the decline of the North Sea oil and gas industry, with decommissioning costs set to overtake new capital investment from 2029, according to INEOS Energy chairman Brian Gilvary.

 

Gilvary said the UK government’s impending decision on the Jackdaw and Rosebank fields would be a defining test of Britain’s credibility as an energy investment destination, with almost £11bn of private investment waiting in the wings.

 

Approval of the two projects would send a positive signal, he said, but would not reverse years of policy instability, restrictions on new drilling and the Energy Profits Levy (EPL), which have made investment in the UK North Sea increasingly difficult to justify.

 

“Let’s call this what it is. This is not managed decline; it is ideological destruction of a national resource owned by the country in the name of net zero.”

 

Gilvary argued that accelerating the UK North Sea’s closure would do little to cut global emissions because demand for oil and gas remains. Instead, production would shift overseas, while Britain would lose jobs, investment, tax revenues and a measure of energy security.

 

The retreat of investors is already accelerating the basin’s decline, Gilvary said.

 

Last month, BP announced it was marketing its UK North Sea oil and gas business, adding to a growing list of operators scaling back their presence in the basin.

 

At the same time, investment is flowing into neighbouring Norway, which is now investing roughly 10 times more than the UK in its continental shelf and exporting some of that gas back to Britain.

 

The consequences are not limited to lost investment.

 

As fields close earlier, decommissioning work is brought forward. The North Sea Transition Authority recently revealed that almost a quarter of spending in the basin over the next five years is expected to go towards shutting infrastructure down rather than developing it.

 

From 2029, decommissioning spending is expected to overtake capital investment.

 

That shift could also put additional pressure on the UK Treasury. Companies can offset a significant proportion of decommissioning costs against tax, meaning premature field closures can bring forward both the loss of future tax receipts and the government’s exposure to decommissioning-related tax relief.

 

Current estimates suggest the combined impact of decommissioning tax relief and lost tax revenues could approach £13bn by 2035.

 

“At a time when public finances are already under pressure, accelerating that liability amounts to economic self-harm.”

 

Gilvary said oil and gas would remain part of Britain’s energy mix for years, making the key question whether those resources are produced domestically or imported.

 

“The question is not whether we use these resources, it is whether we produce them ourselves or pay other countries to do it for us.”

 

He said allowing Jackdaw and Rosebank to proceed would demonstrate a change in direction, but argued that wider reforms were needed to restore investor confidence.

 

Those measures include a more stable fiscal regime, the removal of government restrictions on new drilling and reform of the Energy Profits Levy.

 

Gilvary framed the choice facing the government as a stark one: preserve the North Sea as a strategic source of energy, jobs and tax revenue, or accelerate its decline and become increasingly reliant on imports.

 

“The government now has a choice. Responsibly manage a critical natural resource and pillar of the UK’s energy security while protecting jobs and tax revenues. Or accelerate its decline, exporting emissions and increasing imports at a time of global instability, leaving a gaping hole in the Treasury’s pocket.”