Offshore Energies UK’s 2023 Economic Report reveals the UK must unlock £100 billion of private sector investment so its supply chain and skilled workforce can build key projects to safeguard today’s energy security – and the renewable infrastructure to get the UK to net zero by 2050. The report pinpoints the actions policymakers must take in partnership with business to get this investment moving and tackle the energy challenges facing the nation and its households.
It finds that total offshore energy spend could reach £200bn this decade in oil and gas, offshore wind, carbon capture and storage and low carbon hydrogen:
- Up £80bn of offshore wind investment, of which OEUK members are helping to develop 13 GW of the offshore wind pipeline capacity by 2030. These projects alone require almost £30bn of private investment
- OEUK members are also developing the UK’s first wave of carbon capture and hydrogen cluster projects – with a possible spend of up to £20bn
- OEUK has sight of around £35bn of potential oil and gas capital investment over the next 10 years, of which about half will go on projects in existing fields and half on new fields. This is part of wider oil and gas expenditure that could be £90bn through to 2030.
But about half of this amount – £100 billion – is waiting on Final Investment Decisions from businesses that need renewed certainty to sign off.
To unlock these funds, OEUK has identified concerted policy support, a stable and globally competitive tax regime and improved planning and regulatory timelines as critical. The report details the key moves necessary across all areas of the energy mix to make the UK globally competitive.
OEUK is calling for pragmatic policy across all political parties ahead of the next General Election to safeguard energy security and the homegrown jobs and supply chains needed to build the low carbon future here in the UK. This comes as the Energy Bill returns to the House of Commons for debate this week.
The independent Office for Budgetary Responsibility (OBR) has said £1.4 trillion is needed to get to net zero, with £1 trillion required from the private sector. This comes as the UK faces an accelerating global energy investment race. President Biden’s Inflation Reduction Act (IRA), and ambitious plans across Asia and the EU are all attracting investment and talent from around the world. The UK must not be left behind. Private investment is therefore critical.
David Whitehouse, CEO Offshore Energies UK comments:
“Parliaments may thrive on opposition and argument, but we know big engineering projects only succeed through collaboration. The transition to net zero will be the biggest engineering project this country has ever seen. We need consensus to support the very industries and workers whose skills are vital for building our energy future.
“In recent months we have felt the direct impact of underinvestment in homegrown energy on job security for our workers, the competitiveness of our firms internationally and our future energy bills. Our report shows that with the right frameworks in place, this industry can make the long-term investments to help the UK tackle these challenges head-on.
“The UK mustn’t just become a good place to do energy business, it must become irresistible. Our Economic Report shows that as the global race for energy investment accelerates, the UK must compete by making the most of its diverse homegrown industry, from oil and gas to offshore wind, hydrogen and carbon capture. Globally, this is the lesson other countries have learnt. We must not get left behind.
“Our sector recognises that our energy mix must change and shares the UK’s climate goal ambitions. As we look to successfully manage the shift to a lower carbon world there is no simple choice between oil and gas and renewables, we need both as we cut emissions and decarbonise the economy. Many of the companies investing in opportunities like carbon capture, hydrogen, and offshore wind will require the cashflow from a stable and predictable oil and gas business to fund these opportunities.
“Today the offshore oil and gas industry supports around 220,000 jobs and in 2022 generated almost £30bn in GVA, representing around 1.5% of the total UK economy. This is the bedrock of expertise on which we can build future energy infrastructure for the benefit of everyone in the UK.”
OEUK Economic Report 2023 – fast facts:
- Over 75% Proportion of UK’s total energy derived from oil and gas
- Around 220,000 Number of jobs supported by the offshore industry
- Almost £30 billion Value of the UK oil and gas industry to the UK economy
- £11bn Estimated oil and gas production taxes paid to the UK exchequer in 2022/23
- Around 77bn cubic metres (bcm) UK’s annual gas consumption. Consumption so far in 2023 is 9% lower
- 1,150 cubic metres Average UK gas consumption per person
- 34 bcm UK gas production in 2022. Production so far in 2023 is 6% lower
- 44% Proportion of UK gas that came from the North Sea
- 203 pence per therm Average gas price in 2022 (a 76% increase on 2021)
- 102 pence per therm Average gas price in the first seven months of 2023 – 88 pence per therm less than the same period in 2022
- 61 million (m) tonnes UK oil consumption in 2022. Consumption so far in 2023 is 4% higher
- 0.9 tonnes Average UK oil consumption per person
- 41m tonnes UK oil production. Production so far in 2023 is 12% lower
- 67%: UK oil production equated to around two-thirds of consumption
- £82 per barrel ($101) Average price of oil in 2022 (a 60% increase on 2021)
- £64 per barrel ($80) Average oil price in the first seven months of 2023 – £20 ($28) per barrel less than the same period in 2022
- 13.8 GW Total UK offshore wind capacity – the second highest in the world. Supplying 15% of UK electricity
- 90 GW Overall UK offshore wind capacity potential
- 50 GW UK 2030 offshore wind capacity target.
- 20-30 million tonnes/year CO2 storage The government’s 2030 CCS target – with four cluster projects now supported
- 10 GW of low carbon hydrogen UK government 2030 low carbon hydrogen target