Key insights
- Stifel analysis indicates UK saved £2.5 billion in 2025 due to North Sea gas production versus importing LNG. Savings may increase in 2026 due to Persian Gulf tensions raising global LNG prices. The UK's windfall tax on North Sea producers is under scrutiny, with potential reforms possibly boosting revenue. Despite net-zero targets, the UK will still require significant gas capacity, even with renewable energy expansion. The UK plans to increase LNG import capacity while maintaining the windfall tax, creating uncertainty for domestic gas production.
Investing.com -- UK North Sea gas production saved the country approximately £2.5 billion in 2025 compared to imported liquefied natural gas costs, according to analysis from Stifel released on Tuesday, with savings expected to rise further in 2026 as global LNG prices increase due to the Persian Gulf conflict.
The analysis shows UK North Sea gas accounted for roughly 45% of the country’s gas supply in 2025, with Norwegian piped gas providing 35% and LNG imports making up 20%.
Data from the Office for National Statistics and Department for Energy Security and Net Zero reveals imported LNG cost an average of 18 pence per therm more than UK North Sea gas over the past three years.
Over an eight-year period from 2018 to 2025, LNG imports averaged 91 pence per therm compared to 80 pence for UK NBP gas, representing a 13% premium. The price differential resulted in £2.5 billion in savings for 2025 alone.
Stifel estimates the UK could stabilize near-term production if the government’s windfall tax on North Sea producers was reformed. The firm previously published research suggesting tax reform could raise £25 billion in additional revenue by 2035.
The Climate Change Commission forecasts the UK will consume approximately 12 billion barrels of oil equivalent by 2050, even under a net zero scenario. Only 25% of UK gas is used for power generation, meaning the government’s Clean Power 2030 targets will not eliminate gas demand.
The government projects the UK will require 35 gigawatts of gas-fired power capacity beyond 2030 to back up renewable energy sources.
Under the National Energy System Operator’s Holistic Transition Net Zero scenario, which envisions over 180 gigawatts of renewable generation by 2035, the UK would still need 40 billion cubic meters of gas annually.
The UK is planning to add additional LNG import capacity while maintaining the windfall tax on domestic gas production.