Oil and gas exploration and productivity hits record low

Oil and gas exploration and productivity in the UK has hit a record low this year.

For the first time since the 1960s, no new oil or gas exploration wells have been drilled in UK waters.

Amid job losses throughout the year, 2025 is now the worst year on record for new exploration.

Industry leaders say the outlook is fairly bleak, as more companies are moving their investments overseas, production is declining, and investment is expected to fall.

Harbour Energy alone have axed around 700 roles in the last couple of years.

Investment in the basin is also set to fall by around 40% next year.

Industry has long-blamed the Energy Profits Levy, the windfall tax on oil and gas profits, for the fall in activity.

“The basin is going through a massive change,” Paul de Leeuw, director of the Energy Transition Institute at Robert Gordon University, said.

“It’s not just what’s happening on investment or what’s happening in confidence; you see changing players, you see basically everything is changing.

“And it is a UK issue, because actually worldwide production is still going up, everybody is still drilling wells, and oil and gas is still a fundamental part of the energy mix. This is a UK issue.”

Mr Leeuw added: “It’s a big concern going into 2026, is the confidence level there for people to invest on the back of what’s happened in the Autumn Budget and there’s a big question mark. And of course, no investment means no activity and it will have a material impact on jobs if we don’t get it right.”

Industry leaders said the Energy Profits Levy is a big reason for investor confidence hitting record lows, it’s why operators are shifting investments overseas.

However, the UK Government insist that the tax is fair, there is a so-called sunset clause, meaning it’ll be replaced with a new price mechanism in 2030.

Industry was also thrown a bone by Ed Miliband last month when he announced that new drilling will be allowed if it is tied to existing fields.

That was generally welcomed by industry, but employers and experts are warning that there’s still some way to go.