We recognise the significant contribution which the oil and gas sector makes to our economy and our society. We are also clear that any further extraction and use of fossil fuels must be consistent with Scotland’s climate obligations and Just Transition commitments.
We need to take an evidence-based approach to the energy transition.
Our focus is on meeting Scotland’s energy security needs, reducing emissions and ensuring a just transition for our oil and gas workforce as North Sea resources decline.
Offshore oil and gas licensing is reserved to the UK Government, whereas onshore oil and gas licensing is devolved. We are also responsible for the skills and training policy for Scotland's oil and gas industry.
We are committed to supporting a just energy transition on Scotland’s journey to net zero by:
- commissioning and publishing independent analysis to look at the Scotland's future energy system
- commissioning research and working with partners to develop carbon capture, utilisation and storage in Scotland
- supporting a number of demonstration projects to develop hydrogen and hydrogen fuel cells
- supporting the transition in the North East of Scotland from oil and gas to renewables with our Energy Transition Fund
- supporting businesses, communities and individuals to transition to net zero and create jobs in low carbon industries through the Just Transition Fund
- strategically engaging with stakeholders across the energy sector through multiple avenues, including the Scottish Energy Advisory Board (SEAB)
- working with the North Sea Transition Deal (NSTD) through both the North Sea Transition Forum and the North Sea Transition Deal Delivery Group.
We have previously also:
- concluded our policymaking process on unconventional oil and gas development in Scotland
- enhanced our oil and gas decommissioning capacity and capabilities through the Decommissioning Challenge Fund, which ran three successful application calls between 2017 and 2019
Offshore oil and gas licensing
The UK Government is responsible for the fiscal regime and regulation of the North Sea offshore oil and gas industry, including licensing for exploration and production. We continue to call on the UK Government to adopt a four nations’ approach to agreeing a robust and transparent approach to climate compatibility checkpoints for oil and gas licensing.
The UK Government is also responsible for the health and safety of the offshore oil and gas industry operating on the UK Continental Shelf. This is overseen by independent regulator the Health and Safety Executive.
The North Sea Transition Authority (NSTA) is the UK offshore oil and gas sector’s independent regulator. The Authority is a public body which is within the policy framework set by the UK Government. The NSTA regulates the licensing of exploration and development of the UK’s offshore oil and gas resources, gas storage and unloading activities. The NSTA are also the licensing authority and regulator of carbon capture and storage on the UK continental shelf.
The Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) is the UK regulator of environmental and decommissioning activity for offshore oil and gas operations and carbon capture and storage.
Benefits to the economy from the offshore oil and gas sector
In 2022, the extraction of oil and gas alone was worth an estimated £25.2 billion in GVA to the Scottish economy, representing 11.8% of total Scottish GDP (including a geographical share of UK Extra Region activity). In March 2023 we commissioned the Energy System and Just Transition: Independent Analysis report. The report highlights the Scottish offshore oil and gas sector was responsible for £16 billion in GVA in 2019 and supports 57,000 direct and indirect jobs in Scotland.
With the right support, the number of low carbon jobs is estimated to rise. An increase from 19,000 in 2019 to 77,000 by 2050 is estimated in the energy production sector as the result of a just energy transition. Increasing Scotland’s renewable energy generation, as fossil fuel production naturally declines, could lead to an increase of 7,000 jobs in energy production by 2050.
Support for energy transition and skills
Our draft Energy Strategy and Just Transition Plan (ESJTP) (January 2023) sets out that the North Sea basin is mature and oil and gas production will inevitably decline . Our priority is to support the fastest possible just transition for workers, communities and businesses in the oil and gas sector.
Our oil and gas workers will be essential to the energy transition. A Robert Gordon University review on UK Offshore Energy Workforce Transferability (May 2021) showed over 90% of the UK’s oil and gas workforce have transferable skills to work in adjacent energy sectors.
We are working with the energy sector to plan for a multi-skilled workforce. One that can benefit from opportunities across the energy system, highlighted in the draft ESJTP (January 2023).
Onshore oil and gas licensing
Onshore oil and gas licensing powers were devolved on 9 February 2018. Commencement of sections 47 to 49 of the Scotland Act 2016 transferred powers to:
- legislate for the granting and regulation of onshore licences
- determine the terms and conditions of licences
- regulate the licensing process, including administration of existing onshore licences
The consideration payable for such licences remains a reserved matter. The regulation, including setting, of the consideration payable for a licence is therefore reserved. In addition, the UK Government has powers to revoke a licence on the basis of failure to make payments due under the licence. The NSTA is responsible for administering these issues on behalf of the UK Government.
A memorandum of understanding has been signed with the UK Government and the NSTA setting out arrangements in respect of the reserved matters. The onshore oil and gas licences currently held in Scotland are set out in legislation.
See datasets for onshore oil and gas exploration and appraisal wells drilled under licenses previously held in Scotland on the British Geological Survey’s Onshore Geoindex interactive map.
Bills and legislation
The Scotland Act 2016 devolved onshore oil and gas licensing powers to Scotland.
All other oil and gas legislation is reserved to the UK Government.
Oil and gas (general enquiries)
Oil and gas team
Onshore oil and gas licensing
Onshore and Subsurface Systems Policy Unit