(Commonwealth_UK) According to Offshore Energies UK (OEUK), Britain’s natural gas production has experienced a significant decline of approximately 13% from January to August this year compared to the same period in 2022. This trend is expected to continue, with projections suggesting a similar rate of decline throughout 2024. Ross Dornan, the market intelligence manager at OEUK, emphasized the urgency of the situation, stating that the current decline rates from the North Sea basin are concerning, especially given the limited prospects for new production.
OEUK is advocating for targeted support in the upcoming Autumn Budget, scheduled for October 30, to foster domestic energy investment. The group highlights the potential adverse impacts of the windfall tax imposed by the previous Conservative government, which aimed to address the energy crisis two years ago. Labour’s proposal to increase this levy could further deter investment, with OEUK warning of a possible 80% reduction in oil and gas investments over the next five years. Currently, the only significant project poised for a final investment decision in 2024 appears to be Shell Plc’s Victory gas field in the North Sea.
As it stands, the UK’s energy production now meets only about 60% of national demand, raising alarms amid a volatile European gas market susceptible to geopolitical risks and unforeseen supply disruptions. The UK currently produces approximately 90 million cubic meters of gas daily, a recovery from summer maintenance activities. However, forecasts by National Gas Transmission Plc suggest that the average output during this heating season may drop to around 85 million cubic meters per day, lower than the figures recorded in the previous two years.
In addition to gas, the UK’s oil production is also declining, with an anticipated decrease of about 10% this year. From January to August, oil output averaged 660,000 barrels per day, and full-year estimates may be slightly lower. Cumulatively, the daily output of oil and gas in the first eight months of the year was approximately 1.11 million barrels of oil equivalent, reflecting an 11% decrease year-on-year.
Looking ahead, the North Sea Transition Authority, the regulatory body for the industry, estimates that daily production could fall to around 700,000 barrels by the end of the decade. However, this projection may be overly optimistic, according to Dornan, who stresses that achieving such levels will necessitate a significant increase in new investments—something that currently remains uncertain.
In summary, the rapid decline in UK gas production underscores the urgent need for government action to support the energy sector and ensure the country’s energy security in the coming years.
