The UK must prioritise domestic oil and gas production over imports of LNG to maintain revenues for its energy supply chain as it navigates the energy transition.
According to Offshore Energies UK’s (OEUK’s) 2025 supply chain report, 60% of surveyed respondents said they are now active and gaining business revenues from offshore wind, hydrogen and CCS.
However, while the supply chain is diversifying, the long timelines of many renewables projects means that these sectors only represent a small proportion of overall revenues at present.
Instead, nine companies out of every 10 see more attractive opportunities to grow their business overseas due to uncertainty and a less positive business environment at home.
Many supply chain companies continue to rely on revenue from oil and gas operations to fund essential investments in broader energy transition opportunities.
© Supplied by OEUKOEUK supply chain and people director Katy Heidenreich said: “Every business in the UK irrespective of which sector they’re active in needs certainty, stability from all governments. The UK has a brilliant opportunity to lean into the technologies, products and services needed to get the world to net zero, but it is absolutely essential that it is done in a pragmatic way that safeguards jobs and energy security.”
She added that while it is “good to export our expertise” this “should never come at a cost to work we need to get done in the UK”.
She added: “Around 60% of companies surveyed for the report are diversifying into offshore wind, hydrogen and carbon capture and storage but business revenues from renewables and CCS still represent a relatively low proportion as they make up between zero and a fifth of their turnover.”
OEUK said that the UK must prioritise domestic production over imports to safeguard supply chain companies and ensure they can continue to contribute to the country’s energy security and the broader energy transition.
Despite setting 2050 as its target year for achieving net zero, oil and gas is expected to play a key role in reaching this goal.
OEUK’s report said that the UK will need to harness oil and gas revenues from the UK’s still significant reserves so supply chain companies can survive and thrive.
But the report added that UK oil and gas services spending is projected to decline by 20% from 2025 to 2030.
This is in part due to the UK’s tax regime dragging down the pipeline of oil and gas work with supply chain confidence suffering as result.
With renewables needing to pick up the slack by providing the supply chain with vital revenues, the government must provide clear market signals to create clarity and certainty on work to come.
OEUK’s survey of supply chain sentiment revealed that only a third expect to see business growth in the near term in renewables and CCS.
This lack of confidence stems from uncertainty surrounding the pipeline of future projects.
The report called on the government to provide “clear market signals” to industry to invest in carbon capture and storage, offshore fixed-bottom wind, floating
wind and hydrogen/
OEUK also called on the UK to deploy the previously announced £21.7 billion of funding for CCS and announce a clear funding envelope for track-2 and beyond.
Maintaining a pipeline of projects is vital to ensure the UK’s supply chain remains anchored in the country.
The trade body also said that the UK needs to foster better collaboration across the supply chain plus moves to ensure that government champions the UK energy supply chain capability in offshore wind, hydrogen, and carbon capture and storage.
Commenting on the report, NSTA director of supply chain and decommissioning Pauline Innes said: “The UK supply chain is vital in so many aspects of the North Sea industry and will be a fundamental part in the transition to net zero.
“It’s one of the many reasons that we need industry to fulfil its decommissioning obligations – as well as boosting well intervention activity – and utilise the skills and the people that we have here in the supply chain.”
