UK Oil Production Costs Drop 9% in 2025

The UK Continental Shelf (UKCS) saw a significant reduction in oil production costs in 2025, according to a report by the North Sea Transition Authority (NSTA). Operators spent 9% less per barrel compared to 2024, with the average cost dropping from £19.60 to £17.81. The Brent crude price averaged £52.33 per barrel during the same period. Operating expenditures decreased by £700 million, while production rates remained stable at around 1.1 million barrels of oil equivalent per day (BOEPD).

The NSTA report highlighted that older fields nearing the end of their production life tended to have higher unit operating costs. Several of these older assets ceased production in 2025, while new fields came online, contributing to the overall reduction in costs. More than half of the operators reported lower unit operating costs between 2024 and 2025.

Regionally, the average unit operating costs in 2025 varied: £11.90 in the West of Shetlands, £22.60 in the Northern North Sea, £14.30 in the Central North Sea, and £12.64 in the Southern North Sea and East Irish Sea. Production efficiency improved by 1%, reaching 76% in 2025, a positive shift after a 2% decline between 2023 and 2024. The NSTA aims for an 80% production efficiency target.

Loraine Pace, the NSTA’s head of performance and planning, described the improved unit operating costs as encouraging. She emphasized the need for continued efficiency, innovation, and the adoption of new technologies to manage rising costs projected for 2026 and 2027. The report predicted a modest increase in unit operating costs to around £18/BOE or £19/BOE as production declines slightly faster than operating expenditures.