Why is UK North Sea output falling, and who decides on new oil and gas licences?

Britain's North Sea output is falling mainly because it is an old basin: as Carbon Brief puts it, much of the gas it once contained has already been extracted and burned. According to the regulator, the North Sea Transition Authority, output was around 4.4 million barrels of oil equivalent a day at the start of the millennium, when Britain was a net exporter. It is around one million now, with under 150,000 seen by 2050. Domestic gas production fell by 3.3% to a record low in 2025.

The industry and its critics read that decline differently. Carbon Brief's analysis found gas production set to drop 99% by 2050, or 97% with new licences. Offshore Energies UK, an industry body, says production is in long-term decline but the basin still holds enough to support much of the nation's needs, and that continued responsible exploration could slow the decline right down.

Who decides on new drilling? The North Sea Transition Authority licenses and regulates oil and gas activity, traditionally through licensing rounds, now annual. Developing a field also needs consent: for the Jackdaw gas field in 2026, the environmental regulator OPRED reviewed the project before a ministerial decision. Labour promised a ban on new drilling in its 2024 manifesto. In November 2025 the government said it could hand out new licences where they need no new exploration and link back to existing fields and infrastructure.

Tax is part of the argument. The government kept a 38% windfall levy when prices exceed thresholds, taking the overall tax burden to 78%. The industry says investment will not come without reform of that levy.