The UK Government’s long-awaited North Sea strategy is expected to set the tone for the next phase of energy transition – one that could redefine investment, regulation and jobs across the offshore sector.
It will help industry shape the commercial environment, determine investor confidence and influence the future of the North Sea supply chain for decades.
In an uncertain landscape, the North Sea remains a cornerstone of the UK’s energy system, industrial base and regional economies. The forthcoming strategy is expected to formalise this transition.
While operators will be waiting for an update on the much-maligned Energy Profits Levy, the government will set out how the UK intends to move from hydrocarbons to a diversified, net-zero-aligned offshore energy mix while safeguarding jobs, competitiveness and supply chain resilience.
A real energy mix?
Based on recent government consultations and industry engagement, several priorities are expected to underpin the new framework.
Analysts believe the government is unfortunately unlikely to issue new exploration licences, but will support production from existing assets through their economic lifespan. Industry will want clarity on how decommissioning, infrastructure reuse and late-life asset management will be incentivised to gradually decline oil and gas.
The Energy Profits Levy (windfall tax) is due to expire in 2030 and recent speculation is that the Chancellor will bring this end date forward by a year in her Autumn Budget with a new long-term fiscal framework under consultation. A predictable, investment-friendly tax regime which is responsive to price volatility will be essential in sustaining capital flows.
The expansion of offshore wind, hydrogen and carbon capture, usage and storage (CCUS) projects are expected to feature prominently and there is expected to be commitments to a ‘skills passport’ model, allowing workers to move between oil, gas and renewables projects.
The remit of the North Sea Transition Authority (NSTA) is likely to evolve to reflect the multi-energy nature of the basin. Clearer permitting, spatial planning and environmental rules that are coordinated across devolved administrations will be key to improving project delivery timelines.
While net zero remains the long-term goal, the government is also expected to frame this strategy around security of supply and resilience, ensuring the UK remains competitive in attracting offshore investment relative to Norway, the US and the EU.
Implications for industry
The biggest factor for operators and developers will be stability. Investors need confidence in fiscal terms, permitting frameworks and timelines for project approvals. The strategy must deliver a clearer investment roadmap, particularly for those considering cross-sector portfolios.
With production declining, the North Sea’s extensive infrastructure becomes a strategic asset. Industry will expect incentives for repurposing pipelines and platforms for CO₂ transport and storage, as well as guidance on shared infrastructure use to cut costs and emissions.
There is strong political momentum to maximise UK content in offshore projects with more localised supply chain work. Companies should anticipate requirements or incentives to anchor manufacturing, fabrication and servicing activity domestically in regions such as Aberdeen, Teesside and the Humber.
A practical framework for transferring expertise from hydrocarbons to renewables will be critical. The government is likely to fund training and certification schemes to support this, but industry partnerships with universities, training providers and trade bodies will be required to scale capacity.
The offshore industry has long called for simpler, faster consenting for major infrastructure projects. If the strategy includes concrete proposals to streamline planning, potentially through a “fast-track” process, it could remove one of the biggest barriers to timely investment.
Uncertainty to Opportunity
The North Sea strategy represents a chance to reset the policy environment for offshore energy. For industry, its success will hinge on clarity and collaboration.
There are key challenges to be addressed. The balance between decarbonisation targets and investment viability is likely to remain an ongoing issue. Moving too fast risks supply instability while going too slow risks missing net-zero milestones.
With energies such as hydrogen and CCUS still maturing, project financing will depend on strong government guarantees or contracts for difference (CfDs). Holyrood and Westminster’s differing approaches to new licensing and renewables funding could also complicate planning for cross-jurisdictional projects.
If the government can deliver a coherent, cross-sector plan that recognises the industry’s operational realities, it will help unlock the investment and innovation needed to transform the North Sea into a world-leading clean energy basin.
However, if there’s ambiguity or policy uncertainty, there’s a strong chance that capital, skills and competitive advantage will continue to move overseas. Further industry engagement in this strategy’s final phase will be critical to help shape the long-term future of the UK’s offshore economy.
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