Oil and gas chiefs are hoping for a North Sea revival at the height of the climate crisis with the focus on energy security
Despite generating around £200 billion in tax receipts since it was first harnessed in the 1970s, North Sea oil and gas revenues are expected to plummet in the next five years.
But as the SNP ties itself in knots over whether to once again support new drilling, Scotland’s historic industry could be on the cusp of a renaissance at the height of the climate crisis.
With the consequences of drilling at the flagship Jackdaw gas field unlikely to impact daily lives in Scotland - the approval of the project by Andy Burnham’s government this week will look to some like a symbol of softening attitudes on oil and gas rather than a practical solution to the energy crisis.
The Jackdaw project will create just 27 direct jobs - compared to the hundred being lost every month in the North Sea and the 500 positions blitzed by the closure of the Grangemouth oil refinery.
The economic benefits are greater for the Rosebank oil field, yet to be determined by UK Labour ministers, with more than 400 permanent full time jobs promised to be created. But the energy security narrative that allowed Mr Burnham’s government to justify Jackdaw by providing domestic gas supplies immediately, will not exist for Rosebank.
It is not just politicians who are becoming born-again fossil fuel fans. A poll by YouGov this week found that 57 per cent of Scots would support more exploration licences issued by the UK government, compared to 26 per cent who oppose the measure.
READ MORE: Jackdaw gas field approval cannot be distraction from wider crisis facing Aberdeen and the North Sea
Dr Ewan Gibbs, energy and labour historian and lecturer at the University of Glasgow, told Scotland on Sunday that Jackdaw has been given “symbolic significance” in discussions over the future of the North Sea.
“It’s almost as much about signalling attitudes towards energy sources as it is the substantive question of what this gas field will actually achieve”, he said.
“The actual impact will be highly minimal in terms of the UK’s balance of payments position.”
Dr Gibbs said that “Britain importing large volumes of oil was seen as a problem in the 50s, 60 and especially in the early 70s” as the economic focus was placed on the UK’s balance of payments - transactions between Britain and rest of the world.
He added: “Then oil and gas replaced industrial exports for a period of time in the 80s and 90s and into the mid 2000s.
“The balance of payments has never recovered to the place that it held as a tectonic factor in people’s stories on Britain’s economic wellbeing.”
The Office for Budget Responsibility’s forecasts in March indicated the UK’s oil and gas tax revenues are expected to fall from £4.1 billion in 2025–26 to £100 million by 2030–31 – a plummet of 98 per cent in the space of five years, as production declines and the controversial energy profits levy expires.
READ MORE: Jackdaw bosses set out Tornado gas hopes as government says it will fast-track other North Sea projects
“The urgency of licensing the field is very rarely followed up with the arguments that we need to take measures to stop fields from closing down”, Dr Gibbs said.
“A more serious approach that was really focused on maximising domestic gas output presumably wouldn’t be allowing large numbers of fields to close. That really questions how sincere these commitments to energy security really are.”
Mr Burnham has stressed this week he is taking a “pragmatic” approach to the North Sea, in a veiled dig at his predecessor, Sir Keir Starmer, who did not shift course on his licensing ban or the energy profits levy, hated by the oil and gas industry.
Focus in the coming weeks and months will be on whether the UK Labour government grants environmental consent to the substantial Rosebank oil field that could produce up to 200 million tonnes of harmful carbon emissions.
As well as Labour being on a journey on oil and gas, despite not budging on a manifesto commitment to ban new exploration licensing, the SNP has started to embrace North Sea fossil fuels again after appearing to turn its back by prioritising the climate crisis.
The SNP milked North Sea fossil fuels in the 1970s with the ‘It’s Scotland’s oil’ campaign - arguing that Westminster was hoarding the revenues secured by the black stuff. It was a tactic used sporadically by the party until Nicola Sturgeon became first minister following the 2014 independence referendum.
While it was under Alex Salmond’s leadership the SNP first started backing renewable wind power as a key Scottish industry, it wasn't until his successor took the reins that the party began taking the climate crisis seriously as global consciousness grew about the impact of burning fossil fuels on the environment.
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Ms Sturgeon, caught up in the frenzy of Glasgow hosting the COP26 global climate summit in 2021, admitted the Cambo oil field, which is still awaiting an environmental permit like Rosebank, should not go ahead and vowed to “accelerate as far and as fast as we can the transition away from fossil fuels”.
At the summit, the then-first minister suggested she was in talks for Scotland to potentially join the Beyond Oil and Gas Alliance.
But under John Swinney’s leadership, with Europe honing in on energy security amid Russia’s invasion of Ukraine and rising tensions in the Middle East, the SNP is caught sitting on the fence on a defining political issue.
READ MORE: Gethins under pressure to banish presumption against oil and gas as SNP government poised to wait another year
Last weekend, the party finally attempted to put that era behind it by voting in favour of a motion stating that “domestic production, reviewed by climate compatibility assessments, is clearly preferable to importation” of oil and gas.
But SNP energy minister Stephen Gethins told The Scotsman it could be another year before his government finally sets out its position on oil and gas - arguing the crucial strategic spatial energy plan being drawn up by Westminster needs to be published first.
More delays could have consequences for the SNP.
The Aberdeen South by-election, triggered by Stephen Flynn’s move from Westminster to Holyrood, allowed the Scottish Conservatives - still licking their wounds from a devastating set of results in May - to romp to victory with a campaign almost exclusively focused on the North Sea industry.
Douglas Lumsden, the triumphant Tory candidate, said Rosebank is “vital”, adding: “If it’s not given the green light then I really fear for the future of Aberdeen. I can’t imagine any other projects coming forward if this is turned down, and we would just see all that investment go to other countries.
“That will just mean we import more oil and gas and it will mean that there’s so much revenue that will be lost from the North Sea.”
But if the SNP does move fully back to embracing the North Sea oil and gas sector, not everyone is on board.
Veteran SNP MP, Pete Wishart, took to X to warn that Jackdaw “won't lower bills, do little for energy security and have next to no impact on jobs”.
He added: “What it will do is generate a fortune for fossil fuel companies. It's now up to them to invest that in the transition to renewables.
“Rosebank is on a different scale of environmental havoc compared to Jackdaw and would drive a coach and horses through our climate commitments and unleash 250 million tonnes of CO2 on an already burning planet. It has to be rejected.”
Meanwhile, Dr Gibbs stressed that since 2022 and the Russian invasion of Ukraine, “there's definitely been a stepped-up argument about energy security”.
READ MORE: Scotland's £50bn floating wind industry in crisis talks as contracts cull expected after SNP over-ambition
“That has invested North Sea oil and gas with the state standing it used to have in the 70s and 80s as politically-safe oil, a valuable domestic resource that we need to rely on”, he said.
“That was very much the argument that was made with Jackdaw - we need this gas for Britain, for security.
“That energy security argument has become potent and become available to the political right.”
Analysis by Robert Gordon University last year found that of the estimated 120,000 UK oil and gas jobs, roughly 66,000 are in Scotland. Almost one in 30 of Scotland’s working population is employed in or supports the offshore energy industry. That closes to one in six in north east Scotland.
But as the industry has declined over the last decade, job losses have been a hugely fraught political issue. Between 2016 and 2024, across the UK, an estimated 75,000 jobs have been lost - while the industry has warned almost 1,000 direct and indirect jobs will be shed every month until the end of the decade.
READ MORE: North Sea chief demands action from Andy Burnham to open 'bigger pipeline' of oil and gas projects
“Job losses have become a very dominant feature of discussion”, Dr Gibbs said.
“It’s been the cumulative impact of sustained closures in Aberdeen and the area that have been going on for quarter of a century, but especially since the price crash in 2014. The failure to recover has started to hit home harder and harder.”
The energy expert also pointed to the “disappointment of the renewable transition” for fuelling a growing sentiment in favour of oil and gas in Scotland.
He said: “You had a nationalist government in Scotland saying the transition would be successful and that would accommodate for job losses. Because that hasn’t happened, that’s clearly increased pressure on the SNP.
“There’s also an internal political story there. At the time that Jackdaw was approved by the government initially in 2022, Nicola Sturgeon was still leader of the SNP and at that point, the SNP were opposed to new oil and gas licences.
“They’ve effectively reversed their stance around that. I do think the presence of very vocal supporters of the oil and gas industry, particularly MSPs from the Aberdeenshire area, seems quite important in that story.”
It is estimated that 180 of the 293 active oil and gas fields in the UK North Sea will have ceased production by 2030, including the historic and flagship Forties field - which began operation in 1975, with key pipes to Aberdeenshire and then to Grangemouth.
“I don’t see how licensing these fields is going to fundamentally alter that pattern unfortunately”, Dr Gibbs warned.
“I do find it staggering that the same companies that are closing large numbers of fields are being allowed, politically, to make the case that they are the job creators.”
But Offshore Industries UK (OEUK) believes the Jackdaw approval is the first step in a £50bn North Sea cash cow.
David Whitehouse, chief executive of OEUK, said: “Britain spent £84 billion on energy imports last year, equivalent to almost 3 per cent of GDP. That means jobs, investment and economic value flowing overseas. The right choice is to back domestic production from the North Sea, not greater dependence on imports.
“On every measure, from energy security and emissions to jobs and economic value, the right and responsible choice is to prioritise domestic production.”