Investment in the United Kingdom's oil and gas sector has seen a dramatic decline, with projects falling by 81% last year, according to a report by EY.
The EY UK Attractiveness Survey found that the number of UK oil and gas projects dropped to three in 2025, a significant decrease from 16 the previous year. This decline coincides with Labour's commitment to ban new oil and gas licenses and accelerated Net Zero targets, which aim to boost renewable energy sources.
Foreign Direct Investment (FDI) in the UK's energy sector also experienced a substantial drop, decreasing by 51% in 2025 to 27 projects, down from 55 in 2024. This marks the lowest annual total since 2013, placing the UK behind France as a preferred European destination for energy FDI projects.
Greg Smith, the Tories' shadow energy minister, criticized Labour's approach, stating, "Labour have gone down the rabbit hole of so-called green dogma." He argued that this has resulted in negative consequences for the nation's energy security and prosperity.
According to Labour's own projections, over 100,000 jobs in the North Sea oil and gas sector are expected to be lost by 2050, representing an 80% decrease from 2024 levels. Predictions suggest that by 2030, approximately 54,268 jobs will be lost, and by 2035, more than half the workforce, totaling 77,783 posts, could be gone.
Despite the reported downturn, Prime Minister Andy Burnham has indicated a potential shift in Labour's stance. He is reportedly poised to approve new gas drilling at the Jackdaw field off the coast of Aberdeen in the North Sea this month. However, a decision regarding the Rosebank oil and gas field is likely to be deferred.
Developers suggest that approving projects like Jackdaw and Rosebank could support over 3,500 jobs and generate more than £20 billion in revenue. Burnham has previously acknowledged the continued necessity of oil and gas in the short term, stating, "We won't be able to stop using oil and gas for some time, that's just a fact." He has also suggested that the extraction of these resources could fund the transition to clean energy.
However, Burnham faces internal party opposition from backbenchers advocating for stricter adherence to Net Zero goals, as well as pressure from those in Scotland seeking to preserve the oil and gas industry.
Annie Graham, from EY, commented on the UK's potential to attract future investment by improving grid connection times and reforming planning processes. She also noted that initiatives to encourage domestic energy production could help improve price competitiveness in the UK energy market, especially given ongoing concerns about high energy costs for businesses among international investors. The government's recent commitments to delink electricity and gas prices are also seen as a positive step.