Economic Report 2019

ECONOMIC REPORT 2019

Figure 2: UK Energy Import Dependency and Oil and Gas Production

2,000

60%

UK Oil and Gas Production (LHS)

1,800

50%

Import Dependency (RHS)

1,600

40%

1,400

30%

1,200

20%

1,000

10%

800

0%

600

-10%

UK Energy Import Dependency (%)

400

Oil and Gas Production (Million boe)

-20%

200

-30%

0

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Source: BEIS

There is a clear correlation between the rate of domestic oil and gas production and the energy import dependency of the UK. When domestic oil and gas production levels peaked at around 4.7 million barrels of oil equivalent per day (boepd) in 1999–00, the UK was exporting 20 per cent more energy than it consumed, the majority of which was oil and gas. In line with the fall in UKCS output, the UK became a net importer of energy in 2004 and reached a level of 48 per cent energy import dependency in 2013. Following the 20 per cent increase in UKCS production between 2014–18, energy import dependency has since declined to 35 per cent. The UK government’s current energy reference scenario (outlined prior to the adoption of the 2050 net-zero greenhouse gas [GHG] emissions target) estimates that oil and gas will continue to provide around two-thirds of UK energy needs through to 2035. The recent recommendations from the Committee on Climate Change (CCC), made in the report Net Zero – The UK’s contribution to stopping global warming, 1 outline that in a net-zero economy there will continue to be demand for oil and gas and the need for domestic production — albeit at a lower rate. The CCC forecasts that the UK will still need to consume around 65 million tonnes of oil equivalent (mtoe) per year by 2050, or roughly 450 million boe (just under half of current demand). Given the benefits that indigenous production brings, it is important that as much of this demand as possible is met from UK sources.

1 www.theccc.org.uk/publication/net-zero-the-uks-contribution-to-stopping-global-warming/

10