Investment in UK oil and gas projects has fallen by 81 percent, according to a report by EY, leading to accusations that the Labour party's policies have hindered development in the North Sea. The EY UK Attractiveness Survey found that the number of UK oil and gas projects decreased to three in the past year, a sharp decline from 16 the previous year.
These figures emerged following Labour's commitment to ban new North Sea drilling and an acceleration of Net Zero targets, which has prioritized renewable energy development. The Labour manifesto outlined plans to cease issuing new oil and gas licenses and to maintain a windfall tax on the sector.
However, Prime Minister Andy Burnham, who took over from Sir Keir Starmer, has suggested a potential shift in Labour's stance. Burnham may approve new oil and gas drilling in the North Sea this month, with Miatta Fahnbulleh, the energy secretary, reportedly poised to give the go-ahead for gas drilling at the Jackdaw field off the coast of Aberdeen. A decision on the Rosebank oil and gas field is expected to be deferred.
The EY report also documented a 51 percent decrease in energy-related Foreign Direct Investment (FDI) projects in the UK during 2025. The total number of projects fell from 55 in 2024 to 27 last year, marking the lowest annual figure since 2013. This places the UK behind France as a European destination for energy FDI projects.
Conservative shadow energy minister Greg Smith criticized Labour's approach, stating that the party has embraced "green dogma" with negative consequences for the country'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 over the next 25 years, representing an 80 percent reduction between 2024 and 2050. By 2030, an estimated 54,268 jobs could be lost, with more than half the workforce, totaling 77,783 posts, gone by 2035.
Rosebank, the largest untapped oil field in the North Sea, is located approximately 80 miles northwest of Shetland, while Jackdaw is situated about 150 miles east of Aberdeen.
Burnham has previously acknowledged the continued necessity of oil and gas, stating, "We won't be able to stop using oil and gas for some time, that's just a fact." He has raised the possibility of accelerating their use to fund the transition to clean energy, suggesting that North Sea extraction could serve as a "bridge to the clean energy future we need."
However, Burnham faces internal party opposition from backbenchers advocating for stricter Net Zero goals, as well as from those in Scotland seeking to preserve the oil and gas industry. Developers estimate that approving projects like Rosebank and Jackdaw could support over 3,500 jobs and generate more than £20 billion in revenue.
Annie Graham of EY commented on the UK's potential to attract future investment. She suggested that by expediting grid connection times and reforming planning processes, the UK could persuade developers to invest in energy infrastructure. Graham also noted that initiatives encouraging domestic energy production could help improve price competitiveness, particularly as high energy costs remain a concern for international businesses.