The event was held against the backdrop of the 2025 Autumn Budget, and news that the UK Government will maintain its ban on new oil and gas ("O&G") exploration licenses and retain the Energy Profits Levy ("EPL") on O&G profits until 2030.

The message from participants was clear: the beating heart of the UK O&G sector in Aberdeen faces a grinding halt in investment, driven principally by policy choices. The discussion revealed a systemic and under-reported uptick in job losses across the industry, threatening the economic foundations of Aberdeen.

There were glimmers of hope noted by participants in areas such as Carbon Capture and Storage ("CCS") projects, the decommissioning of O&G infrastructure, and the next generation of floating offshore wind. However, it was clear that the economic benefits promised by opportunities in the energy transition are currently overshadowed by the flight of financial and human capital away from Aberdeen and the UK O&G sector.

Clear government policy signals

The primary cause of the effective freeze in UK O&G investment was agreed around the table to be the EPL. The levy was introduced in May 2022 in response to extraordinary O&G company profits following Russia's invasion of Ukraine and the global energy crisis which followed. The rate has climbed from an initial 25% surcharge on ring-fenced O&G profits, up to its current rate of 38%. Combined with ring-fenced O&G corporation tax of 30%, plus a supplementary charge of 10%, the headline rate of taxes on O&G profits currently sits at 78%.

Participants agreed there was a clear correlation between the high taxes on O&G profits and the general reluctance of operators to commit to long-term capital expenditure.

In the 2025 Autumn Budget, the UK Government set out its vision for a replacement for the EPL post-2030, the Oil and Gas Price Mechanism. This announcement followed extensive consultation between O&G operators and HM Treasury, however the feeling in the room was that the O&G industry's views were not being heard. Participants concluded that the choice to continue taxing the sector at current levels whilst banning new developments is largely political.

With that backdrop, consolidation in the UK O&G market is well underway. Attendees described this trend as a drive towards financial optimisation, rather than a positive signal from investors. Recent consolidations include the formation of the Shell-Equinor joint venture in 2024, and the and Neo Energy-Repsol Resources UK merger in 2025.

With the global nature of financial capital, investors are pivoting away from the UK into markets more accepting of O&G, such as the US. A clear example of this trend was Harbour Energy's $11.2bn acquisition of the upstream O&G assets of Wintershall Dea in 2024, which gave Harbour Energy a clear route into the US O&G market.

Access to financial capital

What is clear is that the financial landscape for UK O&G is evolving. Whilst O&G majors such as Shell and BP generally finance projects using their own balance sheets, smaller operators rely on third-party financing.

The Reserve Based Lending ("RBL") model is the primary method for financing independent O&G companies. In this structure, financing is sized against the value of the borrower's hydrocarbon reserves, which act as collateral.

Participants noted that traditional RBL lenders such as UK and European banks are either retreating from RBL financings or shortening the tenor of facilities. An observed trend is that new RBL facilities tend to mature before 2030, in line with decarbonisation targets set by certain banks.

Despite this challenging environment, transactions are still being closed. The operator EnQuest closed an $800m RBL with a syndicate of eight banks earlier this November. International capital providers continue to view the UK O&G market as an attractive proposition. Participants noted this is partly due to the higher lending margins on RBL facilities, when compared to project finance margins for facilities secured against renewable energy projects.

Job losses and a shrinking talent pool

A key impact of the combination of constrained lending, reduced investment and divisive policy is an increase in job losses across Aberdeen's O&G industry.

The Aberdeen and Grampian Chamber of Commerce recently reported that 25% of its 1,300 members cut jobs in the third quarter of 2025. These job losses include businesses which are expected to play a key role in the energy transition, such as the Port of Aberdeen. Despite investing in deepwater facilities with a view to supporting offshore wind projects, the Port recently reduced its workforce by 15% due to the O&G downturn.

Participants noted that entire teams are being made redundant, often without external publication. A knock-on effect of this is that some workers in their mid-50s are choosing redundancy and retiring outright, taking decades of expertise with them. Younger workers are also questioning whether Aberdeen is where they wish to anchor their careers and looking to London or internationally for more secure employment.

The discussion also covered the disputed 'skills myth' that O&G workers can retrain and join the renewable energy workforce. Participants around the table argued that many O&G skills are highly specialised to the industry, and not easily portable across to renewable energy projects.

Capturing the opportunities

One key growth area identified by participants was CCS projects. CCS is a mitigation technology where carbon dioxide is captured and injected deep underground into geological formations for permanent storage, often depleted North Sea O&G reservoirs. CCS is a key element of the UK's Net Zero strategy, and the existing oil and gas workforce is uniquely qualified to deliver these projects.

The UK Government has provided support to CCS two pilot projects in England, but funding certainty for future projects is not expected until after the 2027 spending review. This has created a critical time-gap that threatens current employment, especially given the pace at which operators and the O&G supply chain is reducing workforce numbers.

A further opportunity for Aberdeen was identified as the decommissioning of O&G infrastructure. This industry is expected to grow as government policy continues to discourage new O&G investments and existing infrastructure reaches end-of-life. Attendees did highlight that a significant proportion of North Sea decommissioning costs are expected to be funded by the UK taxpayer through tax relief schemes provided to operators.

Conclusions

Ultimately, the prosperity of Aberdeen is inextricably linked to the energy industry. With government policy leading to tightened investments, the future of O&G in Aberdeen is uncertain. It is clear that there is some way to go before jobs in offshore wind, CCS and other Net Zero industries begin to offset the employment losses from the O&G industry.

The overarching message from roundtable participants was that investments in the energy sector operate on long term horizons. With the current policy direction, O&G investment in the UK will continue to fall. Clear government direction and funding to support CCS, offshore wind and skills transition projects is needed to support Aberdeen in retaining its title as the UK's energy capital.