By stewartb

“Devastating” WoodMac damns governments approach to North Sea’: this was the headline published December 11 by the respected energy news website, Energy Voice.  It comes from its reporting of a new assessment of successive UK governments’ approach to the offshore oil & gas assets present on the UK Continental Shelf – assets of course mostly present offshore Scotland.

The critique of Westminster/Whitehall governance comes from the respected provider of energy industry/market statistics and insight, namely Wood Mackenzie (aka WoodMac). It’s from an end of year review of key industry talking points internationally: among the top five issues, it identifies “national value destruction” offshore UK.  Here WoodMac points to no less than: ‘five major changes to the fiscal system in two and a half years mixed with regulatory uncertainty’.

And in a particularly damning comment, it notes: ‘Successive UK governments have provided a “masterclass in how to entrench uncertainty, sow speculation and create an un-investible environment”. Investors in oil look for fiscal and regulatory certainty, they said. The UK consistently fails to provide this.’

Source: https://www.energyvoice.com/oilandgas/north-sea/586945/devastating-woodmac-damns-governments-approach-to-north-sea/

As an aside, the BBC News website’s Scotland Business section commented on the state of Scotland’s economy earlier this week. It had this headline: ‘How is Scotland’s economy performing – and how can it improve?’ Didn’t spot any reference to this assessment from WoodMac today and its implications for the state of Scotland’s economy – did you?

Other views

On December 12, Energy Voice published an article under this headline: ‘Scotland’s missed opportunity in focus at E-FWD Westminster event – windfall tax under fire from energy industry leaders.’

E-FWD is described as ‘an influential membership community that brings together the entire UK energy supply chain’. It held an event focused on Scotland’s energy sectors earlier in the week in Westminster which brought together senior industry figures and politicians.

Here are key views expressed at the event, again as reported by Energy Voice: 

• the verdict of one speaker:“Right now there is no just transition”
• ‘News of the job cuts this week at the Port of Aberdeen took centre stage. The port reported a 25% reduction in activity over the summer. The facilities still depend on oil and gas for 60% of its income, while offshore wind represents only 1%.’
• calls for the Energy Profits Levy to be scrapped – ‘But that shared concern went deeper than tax policy.’
  • the EPL is “driving away investment. It’s actually undermining the very drive towards a transition that we all need to see”
• ‘a reported £32 billion is on the hunt for oil and gas opportunities around the world. However:“None of it is coming to the UK because of the policies that are in place preventing new exploration”

And looking ahead:

• on renewable electricity generation: ’Ofgem this week rejected changes to transmission charges that would have reduced costs for Scottish generation. The regulator was apparently concerned about the impact on the wider grid.’ And ‘While the energy regulator is independent, the move makes Scotland’s renewable energy plans more expensive.’
• ‘Scotland has the infrastructure to produce energy, from offshore facilities to onshore. As an alternative to exporting power, there is an opportunity to lean on domestic consumption.’
• ‘Building data centres north of the border would ease grid congestion and sidestep some of those transmission charges. “The economic benefit from that’s huge … given the sheer volume of electricity we’re producing [we should] take advantage of that and give people the one community benefit that they can be certain of, which is jobs”.

Further international insights from WoodMac are relevant to putting the foregoing into a wider context.

1) ‘Oil’s resilience in the energy system – what firm liquids demand means for upstream and refining’ (December 3, 2025)

• ‘.. the outlook for oil demand beyond, certainly into the next decade, looks more robust than it has for some time, with positive implications for the entire value chain.’
• WoodMac identifies two causes here: (i) the war in Ukraine – ‘Many governments have skewed policy towards energy security and affordability over sustainability, strengthening hydrocarbons’ hold on the energy market’; (ii) the slow pace of the energy transition – including the modest uptake of electric vehicles and e-trucks in most countries, except China – ‘That’s supporting demand for gasoline and diesel, which together constitute over half of global oil consumption’.

WoodMac also reports that international oil companies and national oil companies are ‘already positioning for stronger-for-longer demand, focusing on business development to strengthen upstream portfolios to deliver the supply. The task ahead, though, gets tougher for them by the year as demand grows and existing fields decline.’

Interestingly, the same article reviews the current and future prospects for oil refining: ‘the immediate outlook for refining profitability for the rest of this decade is promising. The wave of new-build capacity in China, the Middle East and Africa is coming to an end. Stronger-for-longer oil demand into the next decade points to high refinery utilisation and average global indicator margins 10% to 20% above those of the past five years (excluding the exceptional returns during 2022 and 2023 sparked by Russia’s invasion of Ukraine).’  If only Scotland still had a refinery!

In an opinion piece entitled ‘What defined oil trading in 2025: five moments that mattered – a year shaped by policy uncertainty, supply growth, and structural shifts in refining and trade flows’ (December 1), WoodMac comments:

‘Refinery closures signal rising exposure to product market volatility – In the UK, the closures of Grangemouth in April and Lindsey in August shifted the domestic product balance. Surviving refineries benefited from stronger cracks, but the UK now relies more heavily on imported products and is increasingly exposed to global spot price volatility.’

But how significant is the remaining oil & gas resource offshore Scotland? Again based on the opinion of WoodMac (November 20): ‘The UK’s critical role in Europe’s integrated oil system – assessing how UK crude production, trade flows and refining linkages underpin Europe’s wider energy security.’

‘As Europe’s second-largest oil producer after Norway, the UK plays an outsized role in regional energy flows. The country exports more than 80% of its crude oil production, with 86% destined for European refineries. This translates to a critical supply pipeline: 370,000 b/d flows from the UK to Northwest Europe alone, representing nearly three-quarters of total UK crude exports.’

The article goes on: ‘But the story doesn’t end with crude exports. The relationship is deeply symbiotic. Northwest European refineries process UK crude and return 288,000 b/d of refined oil products back to British shores. In total, 89% of UK crude production is refined somewhere in Europe, and remarkably, 65% of volumes produced in the UK ultimately serve the UK market—either directly through domestic refineries or indirectly via the Northwest European refining and trading network.

It concludes: ‘The UK and Europe operate as an integrated energy system, not as independent markets’

End note

The foregoing in aggregate points to: (i) a dire legacy, from a Scotland perspective, of leaving agency over our nation’s high value indigenous assets with Westminster; (ii) Westminster’s failings to deliver a ‘just transition’; (iii) Westminster’s failings to secure key domestic refining capacity; and (iv) Westminster’s refusal to permit Scotland’s domestic and industrial electricity consumers a price/competitive advantage from our nation’s abundance of renewable energy.

Given all of the above, where is the sense in leaving agency with Westminster to mismanage Scotland’s next era of high value energy opportunities?

And why would we place trust in such Westminster governance when it demands that Scotland must now have new nuclear power generation?

“National value destruction” – a “masterclass” in causing uncertainty, speculation and lack of investment!

Successive UK governments’ track record over Scotland’s offshore oil & gas condemned by authoritative energy industry source.

By stewartb

“Devastating” WoodMac damns governments approach to North Sea’: this was the headline published December 11 by the respected energy news website, Energy Voice.  It comes from its reporting of a new assessment of successive UK governments’ approach to the offshore oil & gas assets present on the UK Continental Shelf – assets of course mostly present offshore Scotland.

The critique of Westminster/Whitehall governance comes from the respected provider of energy industry/market statistics and insight, namely Wood Mackenzie (aka WoodMac). It’s from an end of year review of key industry talking points internationally: among the top five issues, it identifies “national value destruction” offshore UK.  Here WoodMac points to no less than: ‘five major changes to the fiscal system in two and a half years mixed with regulatory uncertainty’.

And in a particularly damning comment, it notes: ‘Successive UK governments have provided a “masterclass in how to entrench uncertainty, sow speculation and create an un-investible environment”. Investors in oil look for fiscal and regulatory certainty, they said. The UK consistently fails to provide this.’

Source: https://www.energyvoice.com/oilandgas/north-sea/586945/devastating-woodmac-damns-governments-approach-to-north-sea/

As an aside, the BBC News website’s Scotland Business section commented on the state of Scotland’s economy earlier this week. It had this headline: ‘How is Scotland’s economy performing – and how can it improve?’ Didn’t spot any reference to this assessment from WoodMac today and its implications for the state of Scotland’s economy – did you?

Other views

On December 12, Energy Voice published an article under this headline: ‘Scotland’s missed opportunity in focus at E-FWD Westminster event – windfall tax under fire from energy industry leaders.’

E-FWD is described as ‘an influential membership community that brings together the entire UK energy supply chain’. It held an event focused on Scotland’s energy sectors earlier in the week in Westminster which brought together senior industry figures and politicians.

Here are key views expressed at the event, again as reported by Energy Voice: 

• the verdict of one speaker:“Right now there is no just transition”
• ‘News of the job cuts this week at the Port of Aberdeen took centre stage. The port reported a 25% reduction in activity over the summer. The facilities still depend on oil and gas for 60% of its income, while offshore wind represents only 1%.’
• calls for the Energy Profits Levy to be scrapped – ‘But that shared concern went deeper than tax policy.’
  • the EPL is “driving away investment. It’s actually undermining the very drive towards a transition that we all need to see”
• ‘a reported £32 billion is on the hunt for oil and gas opportunities around the world. However:“None of it is coming to the UK because of the policies that are in place preventing new exploration”

And looking ahead:

• on renewable electricity generation: ’Ofgem this week rejected changes to transmission charges that would have reduced costs for Scottish generation. The regulator was apparently concerned about the impact on the wider grid.’ And ‘While the energy regulator is independent, the move makes Scotland’s renewable energy plans more expensive.’
• ‘Scotland has the infrastructure to produce energy, from offshore facilities to onshore. As an alternative to exporting power, there is an opportunity to lean on domestic consumption.’
• ‘Building data centres north of the border would ease grid congestion and sidestep some of those transmission charges. “The economic benefit from that’s huge … given the sheer volume of electricity we’re producing [we should] take advantage of that and give people the one community benefit that they can be certain of, which is jobs”.

Further international insights from WoodMac are relevant to putting the foregoing into a wider context.

1) ‘Oil’s resilience in the energy system – what firm liquids demand means for upstream and refining’ (December 3, 2025)

• ‘.. the outlook for oil demand beyond, certainly into the next decade, looks more robust than it has for some time, with positive implications for the entire value chain.’
• WoodMac identifies two causes here: (i) the war in Ukraine – ‘Many governments have skewed policy towards energy security and affordability over sustainability, strengthening hydrocarbons’ hold on the energy market’; (ii) the slow pace of the energy transition – including the modest uptake of electric vehicles and e-trucks in most countries, except China – ‘That’s supporting demand for gasoline and diesel, which together constitute over half of global oil consumption’.

WoodMac also reports that international oil companies and national oil companies are ‘already positioning for stronger-for-longer demand, focusing on business development to strengthen upstream portfolios to deliver the supply. The task ahead, though, gets tougher for them by the year as demand grows and existing fields decline.’

Interestingly, the same article reviews the current and future prospects for oil refining: ‘the immediate outlook for refining profitability for the rest of this decade is promising. The wave of new-build capacity in China, the Middle East and Africa is coming to an end. Stronger-for-longer oil demand into the next decade points to high refinery utilisation and average global indicator margins 10% to 20% above those of the past five years (excluding the exceptional returns during 2022 and 2023 sparked by Russia’s invasion of Ukraine).’  If only Scotland still had a refinery!

In an opinion piece entitled ‘What defined oil trading in 2025: five moments that mattered – a year shaped by policy uncertainty, supply growth, and structural shifts in refining and trade flows’ (December 1), WoodMac comments:

‘Refinery closures signal rising exposure to product market volatility – In the UK, the closures of Grangemouth in April and Lindsey in August shifted the domestic product balance. Surviving refineries benefited from stronger cracks, but the UK now relies more heavily on imported products and is increasingly exposed to global spot price volatility.’

But how significant is the remaining oil & gas resource offshore Scotland? Again based on the opinion of WoodMac (November 20): ‘The UK’s critical role in Europe’s integrated oil system – assessing how UK crude production, trade flows and refining linkages underpin Europe’s wider energy security.’

‘As Europe’s second-largest oil producer after Norway, the UK plays an outsized role in regional energy flows. The country exports more than 80% of its crude oil production, with 86% destined for European refineries. This translates to a critical supply pipeline: 370,000 b/d flows from the UK to Northwest Europe alone, representing nearly three-quarters of total UK crude exports.’

The article goes on: ‘But the story doesn’t end with crude exports. The relationship is deeply symbiotic. Northwest European refineries process UK crude and return 288,000 b/d of refined oil products back to British shores. In total, 89% of UK crude production is refined somewhere in Europe, and remarkably, 65% of volumes produced in the UK ultimately serve the UK market—either directly through domestic refineries or indirectly via the Northwest European refining and trading network.

It concludes: ‘The UK and Europe operate as an integrated energy system, not as independent markets’

End note

The foregoing in aggregate points to: (i) a dire legacy, from a Scotland perspective, of leaving agency over our nation’s high value indigenous assets with Westminster; (ii) Westminster’s failings to deliver a ‘just transition’; (iii) Westminster’s failings to secure key domestic refining capacity; and (iv) Westminster’s refusal to permit Scotland’s domestic and industrial electricity consumers a price/competitive advantage from our nation’s abundance of renewable energy.

Given all of the above, where is the sense in leaving agency with Westminster to mismanage Scotland’s next era of high value energy opportunities?

And why would we place trust in such Westminster governance when it demands that Scotland must now have new nuclear power generation?