Oil

The North Sea declines. Refineries rationalise. Imports bridge the gap.

UK oil demand in 2024 was approximately 1.2 million barrels per day, of which about 0.6 million came from UKCS production and the rest from imports. The UK now imports most of its refined transport fuels. This route traces the upstream decline, the refining rationalisation since 2020, and the strategic stocks regime that protects against acute supply shocks.

08Route 8 of 12 · Energy vectors
12 min read 4 sections 2 diagrams 1 decision tool Last verified

After this route you will be able to

  • Describe the UKCS production profile and when peak oil production was reached.
  • Name the remaining operational GB refineries and what was lost between 2020 and 2024.
  • Explain how the Compulsory Stocking Obligation works and what it guarantees.
  • Identify the role of the North Sea Transition Authority (NSTA).
  • Make a reasoned call on future UKCS licensing.
North Sea oil platform at sunset, an operational UKCS facility

30 June 2022Stanlow refinery announces £360m investment · the first UK refinery expansion in a decade

After three refinery closures in a decade, the 2022 Stanlow announcement framed the transition differently. Some UK refining capacity remains strategically necessary.

Between 2014 and 2022, the UK lost three refineries: Coryton (closed 2012, earlier peak), Milford Haven (2014) and Lindsey (2022 partial, full closure 2024). Each closure followed a pattern: imported finished products (diesel, petrol, jet fuel) out-competed UK processing of imported crude.

On 30 June 2022, Essar Oil announced a £360 million investment at Stanlow including a new hydrogen production facility and carbon capture to reduce the site's own emissions. The decision reflected a changed view: UK refining capacity, if it can reduce its own carbon footprint, remains strategically valuable for decades to come.

By 2026, the GB refining footprint is six operational sites: Fawley (largest, ExxonMobil), Stanlow (Essar), Pembroke (Valero), Grangemouth (Petroineos, announcing 2025 closure), Humber (Phillips 66), and Lindsey (now Prax, limited operation). Total capacity is about 1.1 million barrels per day down from 1.8 million in 2000.

The UK became an oil importer during the 2010s. Is further refinery rationalisation inevitable, or does a decarbonised UK still need strategic refining capacity at home?

The answer depends on both economics and emergency preparedness. Refining is a global business. But crude and product imports require ports, pipelines, storage, and people who can crack a barrel of Brent into road fuel.

Section 01 · UKCS production

From 2.9 million barrels per day in 1999 to 0.6 million in 2024.

UK Continental Shelf output peaked in 1999. The decline is not a policy choice; it is the natural profile of a mature petroleum province. The North Sea Transition Authority manages the remaining licences and the decommissioning that follows.

Diagram 01 · UKCS oil and gas at a glance

UKCS = UK Continental Shelf. mbpd = million barrels per day. Stocks minimum under IEA agreement = 90 days of net imports or 61 days of consumption (the UK holds the higher of the two).

The UKCS decline rate is about 4-6 percent per year on average, varying with specific field start-ups. The North Sea Transition Deal commits operators to 50 percent emissions reduction by 2030 and supports investment in decarbonised production (electrified platforms, CCUS-linked reservoirs). Licensing continues under a revised regime that weighs security of supply against transition pace.

Section 02 · Refining

Six refineries left. One announced closure. Grangemouth 2025.

Refining takes crude oil and separates it into fuels: petrol, diesel, jet kerosene, heating oil, marine fuel, petrochemical feedstocks. The UK industry has contracted by about 40 percent since 2000.

Fawley (Southampton): Largest UK refinery, ExxonMobil-operated. ~270,000 barrels per day capacity. Heavy investment in low-sulphur diesel and petrochemical feedstocks.

Stanlow (Ellesmere Port): Second largest, Essar Oil UK. ~200,000 barrels per day. Investing in hydrogen and CCUS integration as part of the HyNet cluster.

Pembroke: Valero, ~270,000 barrels per day. Strategically located on the Welsh coast with deep-water terminal access.

Grangemouth: Petroineos, ~150,000 barrels per day, announcing closure in Q2 2025 with conversion to an import terminal. Scotland will lose its only refinery.

Humber (Immingham): Phillips 66, ~221,000 barrels per day. Specialises in calcined coke and specialty products.

Lindsey: Prax Group, reduced operation since 2022 main closure. Small current capacity, uncertain future.

Section 03 · Strategic stocks

Sixty-seven and a half days of net imports, by law.

UK is a member of the International Energy Agency and must hold emergency oil stocks equivalent to 90 days of net oil imports or 61 days of inland consumption, whichever is higher.

The Compulsory Stocking Obligation is implemented under the Oil Stocking Act 1975 and now the Energy Act 2008. It requires suppliers of road fuels and aviation fuel to hold stocks proportionate to their market share. Stocks are primarily held at refineries, terminals and at bulk storage facilities (including the Trafigura-owned Immingham Oil Terminal).

The UK currently holds 67.5 days of net imports under the calculation basis that applies to the IEA obligation. As an IEA member, the UK participates in coordinated release during global emergencies (the 2022 Russian invasion of Ukraine triggered the first coordinated release in more than a decade).

The system was designed for a world where the UK was a net oil exporter. As import dependence grows, the stocks obligation binds more tightly on fewer operators.

Every oil supplier shall hold emergency oil stocks equivalent to their share of total UK consumption. Stocks may be held physically by the supplier, through ticketed tickets with other obligated parties, or through bilateral agreements with EU member state stocks holding entities.

Energy Act 2008, Part 2 (UK Compulsory Stocking Obligation)

Section 04 · The licensing call

New UKCS licences: yes, no, or conditional?

Each licensing round is a choice between managed decline, security of supply, and climate commitment. The 2022 round was described by the NSTA as potentially the last large UKCS licensing round, though subsequent rounds have continued.

Each choice combines fiscal revenue, emissions, and security of supply in different proportions. Authorise new licences with normal terms. Authorise licences conditional on emissions performance. Stop new licensing. Produce existing fields only. This is the 2021-23 policy direction under successive governments. Political cost rose sharply after 2023. Start over This is closer to the 2024-25 Labour government's stated position. The framework is emerging but not fully codified. Start over This is what some climate-focused analyses advocate. It has large second-order implications for Scotland's industrial strategy. Start over

Check your understanding

Three questions on what you have just read.

2000 1999 2005 2015 4 5 6 8 Government-owned oil reserves Only refinery-held oil Suppliers to hold emergency stocks proportionate to market share Voluntary industry cooperation

Key takeaways

  • UK oil demand ~1.2 mbpd in 2024. UKCS production ~0.6 mbpd, down from 2.9 mbpd peak in 1999.
  • Six operational refineries. Grangemouth closes in 2025. UK will then have five, compared to eleven in the 1980s.
  • Strategic stocks obligation: 67.5 days of net imports under IEA rules.
  • NSTA manages 300+ active fields and decommissioning of end-of-life assets.
  • The UKCS licensing debate is a three-way trade-off between fiscal, emissions and supply security.

References

  1. North Sea Transition Authority

    Field register, decommissioning schedule, licensing regime.

    Primary regulatory source.

  2. DESNZ DUKES 2025, Chapter 3 Oil

    Oil demand, supply, refinery throughput, stocks.

    Authoritative UK statistics.

  3. IEA: Emergency oil stocks

    UK obligation, coordinated release history.

    International stocks regime.

  4. UK Petroleum Industry Association

    Refinery operational data, industry commentary.

    Industry trade body reference.

  5. North Sea Transition Deal

    March 2021; 50 percent emissions reduction by 2030 commitment.

    Industry-government decarbonisation agreement.

The next route covers CCUS. The cluster-based carbon capture programme that determines whether decarbonised gas and residual industrial emissions have a geological destination.