Institutional investors are pushing back against growing speculation that Prime Minister Andy Burnham will loosen restrictions on North Sea oil and gas drilling, arguing that expanded production would fail on every measure ministers claim to be pursuing.
“If what you’re trying to achieve is the trifecta that most governments appear to be looking for in energy policy now, which is affordability, energy independence and decarbonization,” then increasing North Sea drilling “doesn’t achieve any of those,” said Laura Hillis, managing director for responsible investment at the £3.4 billion ($4.6 billion) Church of England Pensions Board.
The intervention comes as Burnham, who took office in July, has signalled he will take a “pragmatic approach” to North Sea resources rather than uphold Labour’s manifesto pledge against new exploration licences. Decisions on two contested projects, the Rosebank oilfield and the Jackdaw gas field, are expected once public consultations close in mid-August.
Investors’ scepticism is rooted in the economics of the basin rather than ideology. Around 80% of UK-produced crude oil is exported, largely because domestic refineries are configured to process different grades of crude than those extracted from the North Sea. That mismatch means higher domestic output would not necessarily lower household bills, since UK gas and oil prices are set largely by international markets rather than domestic supply.
The debate has intensified following BP‘s decision to put its entire North Sea business up for sale, a move chief executive Meg O’Neill said was designed to “direct capital to our highest-value opportunities,” according to Reuters. The sale, worth an estimated $2 billion, ends more than 60 years of continuous BP production in British waters and has been read as a signal of waning confidence in the basin’s near-term prospects.
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That confidence gap is reflected in the investment figures. UK upstream oil and gas investment fell to £4.4 billion in 2025 and is forecast to decline further to around £2.5 billion in 2026, according to Wood Mackenzie data cited by Net Zero Investor. No North Sea project has received a final investment decision since mid-2024, and Wood Mackenzie has separately projected that 2026 could be the last year UK production exceeds 1 million barrels of oil equivalent per day.
Other long-term investors echoed Hillis’s call for policy certainty over a reversal on climate commitments. “Pushing ahead with further North Sea fossil fuel extraction runs completely out of step with the global shift to clean energy,” said James Alexander, chief executive of the UK Sustainable Investment and Finance Association, adding that “the new prime minister must stand firm on commitments to reach net zero emissions by 2050, so private finance has the confidence to invest in the transition.”
Government officials have previously acknowledged the limits of new licensing. A spokesperson has said granting further exploration permits “cannot ensure energy security and will not reduce bills,” according to the BBC. Burnham’s government faces a decision on Rosebank and Jackdaw once consultations close in mid-August, with the wider licensing question likely to remain live through the autumn budget.
