<article><p class="lead">The UK's oil and gas sector needs to attract new investments for the country to balance its energy demand with transitioning to a lower-carbon future, an industry group said today.</p><p>OGUK said in its <i>Economic Report 2021</i> that the UK attracted £3.7bn ($5.1bn) of oil and gas capital investment in 2020, the lowest since 1973. It estimates that around £3bn has been taken out of upstream spending plans in 2020-21 in response to the Covid-19 pandemic. </p><p>It said it "has visibility" of around £21bn to be invested in 2021-25, delivering 2.7bn bl of oil equivalent (boe) of hydrocarbon resources. But it said that only £6.6bn of that has been fully committed by companies.</p><p>"OGUK is clear that there is a continued need to invest in new oil and gas developments to ensure security of supply and a strong domestic industry upon which to build the low-carbon energy ecosystem of the future," it said. It called for "a managed transition", and said it "refutes the cliff edge approach being suggested by some as a symbolic gesture", noting that the government's independent climate-change advisers have said half of the UK's energy requirements between now and 2050 will still be met by oil and gas.</p><p>But climate activists question the need for more hydrocarbon output, emboldened by <a href="https://direct.argusmedia.com/newsandanalysis/article/2215935">the IEA's declaration</a> in May that the path to net zero by 2050 excludes any new oil and gas fields being approved for development. Environmental group <a href="https://direct.argusmedia.com/newsandanalysis/article/2249406">Greenpeace is in court today</a> to challenge the UK government's permission for BP to drill the North Sea Vorlich field, effectively seeking to stop production there. </p><p>Greenpeace said that if it wins this case, there could be implications for <a href="https://direct.argusmedia.com/newsandanalysis/article/2247792">the Cambo field</a>, which is awaiting the green light from UK's Oil and Gas Authority (OGA) and that has become a focal point for environmentalists ahead of the UK hosting the UN COP26 conference in November.</p><p>OGUK highlighted that as production falls, demand will be met by imports. It said that UK hydrocarbon output fell by 11pc year on year to 1mn boe/d in the first quarter, and said: "in the first few months of 2021, the UK has imported more gas than any other year, as demand rose, and domestic production fell."</p><p>"And while renewables have made inroads in supporting electricity generation, that electricity still only accounts for 20pc of the UK's total primary energy needs," it said.</p><p>In particular, the industry is banking on oil and gas output becoming lower-carbon through means such as the electrification of offshore installations. Highlighting the advantage of the basin as a near-infrastructure one, OGUK estimates that some 95pc of oil and gas prospects offshore the UK are "within 45km of a hub currently in production or coming online within the next 10 years".</p><p>OGUK estimates that the oil and gas industry supports almost 200,000 jobs in the country. A recent <a href="https://direct.argusmedia.com/newsandanalysis/article/2218329">report on workforce transferability</a>, conducted by Scotland's Robert Gordon University, found that most of these roles are suited to a switch into low-carbon energy sectors.</p><p class="bylines">By Konstantin Rozhnov</p></article>