Donald Trump and Nigel Farage talk about North Sea oil as though it were a national treasure squandered by green zealotry. Open the books, and the story is rather deflating.
In 2022, the year energy prices spiked, the entire North Sea brought the Treasury barely £9 billion in tax, its recent peak, and the figure has fallen every year since. The new fields now fought over most fiercely, Rosebank, Jackdaw, Cambo and a scattering of smaller projects, would on the available estimates contribute a combined £8 billion to £12 billion across the twenty to thirty years from first production to exhaustion. Spread over each year, that is £300 million to £500 million, a rounding error beside national tax receipts that run past a trillion pounds. The money tree, it turns out, shakes out loose change.
And that is before the reliefs. The headline rate on North Sea oil and gas is 78%, which sounds punishing, until you notice the government’s other hand quietly handing money back. When a field reaches the end of its life the platforms must be dismantled and the wells plugged, and the state covers 30 to 40% of that cost through tax relief; companies may also carry losses back against past years, which amounts to refunding tax already collected. Once these are counted, the net take shrinks further. One analysis estimates that Rosebank alone, in a base case, would leave the Treasury about £258 million worse off, because the reliefs are granted up front at the high rate while the profits arrive after 2030, once the rate has fallen.
That is a projection. What these companies have actually paid is starker. A rate of 78% on paper has, in cash, often meant zero, or less. From 2018 to 2021 Shell paid no tax on its North Sea business and took refunds instead; the windfall levy briefly forced it to pay in 2022 and 2023, but by 2024 it was back to paying nothing on North Sea drilling and recovered roughly £12 million, thanks to relief on decommissioning the Brent field. Equinor, the developer behind Rosebank, paid more than 95% of its 2023 corporate income tax to Norway and barely £20 million of it to Britain. None of this is evasion; it is all lawful relief. But it makes the point plainly: hollow out the tax base, and the rate on paper is just for show.
The larger bill never enters the ledger at all. The oil is pulled up to be burned, and the carbon dioxide released is a real cost. Valued at the UK government’s own carbon price of about £273 a tonne, the lifetime emissions from these new fields come to roughly £100 billion; even on the generous assumption that the oil would simply be burned elsewhere if Britain did not produce it, halving the figure still leaves around £50 billion. Against that, the Treasury’s billion or two in receipts is, quite literally, small change.
As for the hope that more exploration will turn things around, the geology disagrees. About 93% of the North Sea’s recoverable oil and gas has already been taken out across sixty years of production, and new drilling could add little more than 1% of the lifetime total. West of Shetland, fifty years and 171 exploration wells produced just 13 fields in or near production, a success rate of around 8%. In 2024 only three exploration wells were drilled, a ten-year low. The basin is draining, and no amount of drilling refills this particular account.
Then there is the claim that more wells would lower energy bills, which mistakes a global market for a domestic tap. Once licensed, North Sea oil and gas belongs to private companies that sell it at international prices to the highest bidder, with roughly 80% of the oil exported outright; the price is set globally, and does not move because Britain pumps a few more barrels. The only channel through which extraction could touch bills is rebated tax, yet £300 million to £500 million a year, spread across some 28 million households, comes to a little over a tenner each, less than 1% of an average £1,776 bill. Even Claire Coutinho, the Conservative energy secretary, conceded in 2023 that new drilling would not bring bills down.
So the case does not rest on revenue, on bills or on energy security, each of which collapses on inspection; what its defenders fall back on, in the end, is jobs and posture. It is dressed up as a national treasure only because “small, shrinking, possibly negative, no help on bills, and carrying a large climate debt” makes no kind of slogan. On an honest balance sheet it is a thin and fragile stream of revenue, wrapped around a vast climate liability, lying in a basin that is nearly drained.
