Big Slump Expected in North Sea Oil & Gas Investment

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Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

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Summary

Investment in the U.K. North Sea's oil and gas sector is expected to slump noticeably during 2026.

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U.K. North Sea Facing Bleak 2026

Oil and gas investment in the U.K. North Sea is expected to drop sharply in 2026 to below US$3.5 billion, its lowest real-term level since the 1970s.  

According to data produced by Wood Mackenzie, upstream capital expenditure (capex) will hit new lows, estimating that 2026 may be the last year that  U.K. production exceeds 1 million barrels of oil equivalent per day (BOE/d). In its report, North Sea upstream: 5 things to look for in 2026, the market watcher noted the sharp difference in the investment profiles of Norway and the U.K. in the North Sea region, highlighting how U.K investment is falling off in an anti-oil and -gas regulatory system while Norway maintains strong spending and exploration under more supportive government policies. 

"The North Sea faces a period of stark divergence between Norway's sustained momentum and the U.K.'s deepest downturn in decades," said Gail Anderson, research director for North Sea Upstream at Wood Mackenzie. "Norway's focus on accelerating project timelines and maintaining gas supply will be critical for European energy security. Meanwhile, the U.K.'s newly consolidated landscape creates potential for recovery, but only if regulatory clarity fully returns to unlock deferred investment." 

Remaining U.K. Resources

According to the U.K. regulator, the North Sea Transition Authority (NSTA), there are  2.9 billion barrels of proven reserves in addition to another 5.3 billion barrels of what it classifies as less certain, 'contingent resources.' Finally, there's the third category called 'prospective resources' that would need a lot more survey and exploratory work to verify. They stand at 15.8 billion barrels, up by more than 1 billion barrels on previous estimates, due to data gathered under the licences issued in 2022. Over the past 50 years, oil and gas companies have extracted about 48 billion barrels from the region but production has been declining for decades.

In the latter half of last year, Industrial Info reported on a series of landmark mergers between U.K. North Sea operators, as consolidation becomes necessary to survive and prosper. In December, French energy major TotalEnergies SE agreed to merge its U.K. North Sea oil and gas business with Neo Next Energy to create Neo Next+, the largest operator in the region from next year. It came just weeks after rivals Shell plc and Equinor launched Adura, the new company created from their merged U.K. North Sea offshore oil and gas assets. For more information, see December 24, 2025, article - TotalEnergies Creates Largest North Sea Player in U.K. and December 9, 2025, article - Shell, Equinor Launch Adura as Biggest Player in U.K. North Sea.

2026 Predictions

• Investment will fall overall, according to Wood MacKenzie, but Norway has the momentum to develop resources faster. Its development spend will remain around US$20 billion as the largest developments continue and investment in producing fields remains robust. At the same time as spending drops, development unit costs will remain high for now. Cutting the time from discovery to production is needed to maintain supply and delay decommissioning. Kjøttkake will be one to watch as DNO (Oslo, Norway) and Aker BP (Fornebu, Norway) plan to deliver production just three years after discovery, with a final investment decision in 2026 increasingly likely. Wood Mac expects progress on Equinor's Ringvei Vest project.
• U.K. upstream investment could fall to less than US$3.5 billion, the lowest level in real terms since the early 1970s. No projects have been sanctioned since mid-2024. The agency expects no major final investment decisions for the second year running. The U.K. could produce over 1 million boe/d for the last time in 2026. New investment at Captain and Clair will boost output while Murlach, Penguins and Victory ramp up. Adura's 72 million-boe Jackdaw project will be the U.K.'s biggest start-up, contingent on government environmental approval.
• Supply will remain steady, but risks are finely balanced: North Sea production will average 5.3 million boe/d in 2026, keeping supply at similar levels since 2021. Norway will maintain a plateau at around 4.1 million boe/d, with maintaining gas supply to Europe a top priority. New and recent projects will contribute 500,000 boe/d, equivalent to 12.5% of total production. 
• Consolidation drives U.K. deals but makes Norway mergers and acquisitions (M&A) challenging. The U.K. market is shifting toward more transformative M&A as companies decide their future following the recent budget. U.K.-focused players, particularly Adura, NEO NEXT+ and Ithaca Energy (Aberdeen, Scotland), will continue to be aggregators of more assets and more companies. Norway will remain a closed swap-shop. DNO's US$1.6 billion acquisition of Sval Energi (Stavanger, Norway) aside, large transactions have dried up over the last two years.
• Norway dominates North Sea exploration and appraisal: North Sea exploration is almost exclusively a Norwegian endeavour as it remains one of the world's hotspots for offshore drilling. Operators will drill over 30 exploration wells targeting almost 1.3 billion boe of prospective resources in Norway in 2026. Total unrisked prospect valuations could exceed US$2.5 billion. 

Key Takeaways

• Oil and gas investment in the U.K. North Sea is expected to drop sharply in 2026 to its lowest real terms level since the 1970s. 
• 2026 could be the last year that U.K. production exceeds 1 million barrels of oil equivalent per day (BOE/d).
• North Sea production will average 5.3 million BOE/d in 2026, keeping supply at similar levels since 2021.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resource's Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).

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