Imagine two neighboring countries, both sitting on a goldmine of oil and gas in the North Sea, yet one is thriving while the other is on the brink of collapse. This is the stark reality facing Norway and the UK today. While Norway is doubling down on its energy resources, the UK seems to be abandoning its own, leaving many to wonder: Why the drastic difference?
The UK and Norway, separated by just a few hundred miles of water, have taken radically divergent paths in managing their North Sea oil and gas reserves. The UK, fixated on achieving net-zero emissions, has created a hostile environment for investors with ever-changing regulations and taxes. In contrast, Norway, also committed to net-zero, is actively encouraging exploration and reaping massive financial rewards from its resources. But here's where it gets controversial: Is the UK’s approach a noble but misguided attempt to combat climate change, or is it a self-inflicted wound that undermines its energy security and economic stability?
The consequences of these contrasting strategies are impossible to ignore. The UK, once a major player in North Sea oil, now finds itself increasingly reliant on imports as its mature fields dry up and new licenses remain unissued. Meanwhile, Norway has not only boosted its production but has also become Europe’s top gas supplier, including to the UK. And this is the part most people miss: Norway’s success isn’t just about luck; it’s the result of decades of consistent government support for the oil and gas industry, recognizing its role in job creation and economic growth.
Norway’s commitment goes beyond the North Sea. It’s actively exploring untapped resources in the Norwegian Sea and even the Arctic waters of the Barents Sea. The Norwegian government is planning its 26th licensing round in frontier areas, aiming to offset an expected decline in production from the early 2030s. To sweeten the deal, companies in Norway can recoup 71.8% of exploration-related losses, and while taxes are high, they’ve remained stable since the 1990s, providing long-term certainty for investors.
In stark contrast, the UK’s tax regime has been a moving target, changing annually since 2022 under both Conservative and Labour governments. This unpredictability has driven companies away, with many abandoning the UK North Sea altogether. The introduction of the Energy Profits Levy (EPL), or windfall tax, in 2022 only exacerbated the issue, leaving oil and gas companies pleading for stability. Here’s a thought-provoking question: Could the UK’s aggressive taxation and regulatory changes actually be accelerating its dependence on foreign oil and gas, rather than reducing it?
The impact is already being felt. Last year, the UK saw the removal of a 29% investment allowance on oil and gas operations, further stifling investment. The result? An exodus of companies, plummeting production, and a near halt in exploration drilling. According to energy consultancy Wood Mackenzie, 2025 is set to be the first year since 1960 with no exploration wells drilled in the UK North Sea. Is this the beginning of the end for the UK’s oil and gas industry?
Major players are already voting with their feet. U.S. oil producer Apache announced it would cease UK North Sea operations by 2030, citing unsustainable returns due to regulatory burdens. Ineos Energy, another key player, halted UK investments this summer, labeling the tax regime “the most unstable in the world.” Brian Gilvary, Ineos Energy chairman and former BP CFO, bluntly stated that the UK’s tax regime, over-regulation, and negative political attitude toward oil and gas are deterring investors.
The UK government is now scrambling to consult on a new tax regime and licensing rules, with decisions expected this autumn. The Offshore Energies UK (OEUK) association is urging the government to replace the EPL with a stable, profits-based tax system and to update licensing rules to ensure predictable access to resources. But time is running out. Oil and gas production has already plunged by 40% in the past five years and is projected to halve again by 2030.
While the UK races to save its industry, Norway is reaping the rewards of its long-term vision. As Western Europe’s largest oil and gas producer, Norway is not resting on its laurels. It understands the need for continued exploration and new field developments to maintain high output levels as long as global demand persists. The Norwegian government’s unwavering support for the industry has generated massive revenues, funneling trillions into its sovereign wealth fund, the Government Pension Fund Global, often called ‘Norway’s oil fund.’
Norway’s Energy Minister, Terje Aasland, summed it up: ‘We need new discoveries to ensure Norway remains a stable and predictable supplier of oil and gas to Europe.’ But here’s a counterpoint to consider: As the world transitions to renewable energy, is Norway’s heavy reliance on oil and gas a risky long-term strategy, or is it a pragmatic approach to meeting current global energy demands?
What do you think? Is the UK’s focus on net-zero worth the economic and energy security trade-offs, or should it strike a balance like Norway? Share your thoughts in the comments below—let’s spark a debate!
