The government is preparing to set out plans that would permit additional North Sea oil and gas drilling by loosening current restrictions, according to details expected in Wednesday’s Budget. Chancellor Rachel Reeves is due to launch the North Sea Strategy, with the Department for Energy Security and Net Zero publishing the full document shortly afterwards. The strategy is anticipated to reinterpret Labour’s pledge on new exploration more broadly, enabling fresh developments that are connected to – or “tied back” to – existing licensed fields.
The “tieback” approach, traditionally used for relatively minor extensions to nearby reservoirs, was first hinted at during Labour’s autumn conference. Although the policy update will not directly address the highly debated Rosebank project, industry observers believe the more permissive framework could strengthen the likelihood of that field ultimately receiving approval. Rosebank, unlike conventional tiebacks, would require its own dedicated infrastructure.
Industry pressure has also intensified around the 78% windfall tax, which is scheduled to end in 2030. Oil and gas operators argue that the levy has discouraged investment and pushed companies to redirect funds overseas. Research from Robert Gordon University has estimated that around 1,000 North Sea jobs are being lost each month. Some form of revised tax mechanism – potentially a “cap and floor” linked to oil prices – is thought to be under consideration.
Business leaders in Aberdeen warn the government that amending permitting rules without easing the tax burden will not be enough to halt declining activity. Russell Borthwick of the Aberdeen & Grampian Chamber of Commerce criticised existing policy as damaging and argued that firms will continue to withdraw from the region unless the Energy Profits Levy is scaled back. He urged the Chancellor to signal a change in direction in 2026 to prevent further job losses and investment cuts.
