Published by Oil Change International and Greenpeace UK
This briefing shows that companies are set to make £11.6 billion windfall on UK oil and gas in 2022 and why the UK government is missing this opportunity to fund an energy transition.
Russia’s war in Ukraine has spiked oil and gas prices as much of the world seeks to punish Russia, one of the world’s largest oil and gas producers, for its senseless aggression. While consumers feel the pain of rising retail prices, the profits are largely made by oil and gas producers selling their product into overheated commodity markets. The average price of the UK North Sea based Brent crude oil benchmark rose from $86 per barrel (Bbl) in January to $117 in March. Gas prices have also spiked.
While some of the initial fears of extreme high prices appear to have eased, the war is clearly driving an expectation of inflated oil and gas prices for the foreseeable future. We used the Rystad Energy Ucube database, an energy industry data analytics service, to gauge the projected impact of the war on company profits from producing oil and gas in the UK in 2022. We found that while the average oil price in 2022 was expected to increase 58%, the projected profit from extracting UK oil and gas would rise on average by 111%. This provides a windfall for the UK oil and gas industry of an estimated £11.6 billion, primarily derived from the war’s impact on oil and gas prices.