North Sea upstream investment will fall to around US$26 billion in 2026, down over 10% year-on-year, according to Wood Mackenzie's latest North Sea outlook.
Capital discipline will be evident as companies plan for lower oil and gas prices. But the tough fiscal and regulatory policy in the UK, the unwinding of Norway's current investment cycle, and lack of opportunities in Denmark are more significant factors driving the decline.
Despite the spending pullback, North Sea production will remain steady at around 5.3 million boe/d, underpinned by new start-ups in both Norway and the UK.
"The North Sea faces a period of stark divergence between Norway's sustained momentum and the UK's deepest downturn in decades," said Gail Anderson, Research Director, North Sea Upstream at Wood Mackenzie. "Norway's focus on accelerating project timelines and maintaining gas supply will be critical for European energy security. Meanwhile, the UK's newly consolidated landscape creates potential for recovery, but only if regulatory clarity fully returns to unlock deferred investment."
Wood Mackenzie identifies five key North Sea upstream themes for 2026: Investment to fall but there is momentum in Norway to develop faster: Norway's development spend will remain around US$20 billion as the largest developments continue and investment in producing fields remains robust. While spend will be down, development unit costs will remain stubbornly high for now. Cutting the time from discovery to production is needed to maintain supply and delay decommissioning. Expect to see more coordinated developments of subsea tiebacks to achieve this. Kjøttkake will be one to watch as DNO and Aker BP plan to deliver production just three years after discovery, with FID in 2026 increasingly likely. We expect progress on Equinor’s Ringvei Vest project.
UK upstream investment could fall to less than US$3.5 billion, the lowest level in real terms since the early 1970s. No projects have been sanctioned since mid-2024. We expect no major final investment decisions for the second year running.
Supply will remain steady, but risks are finely balanced: North Sea production will average 5.3 million boe/d in 2026, keeping supply at similar levels since 2021. Norway will keep plateau at around 4.1 million boe/d, with maintaining gas supply to Europe a top priority. New and recent projects will contribute 500 000 boe/d, equivalent to 12.5% of total production. Equinor's Johan Castberg and Var Energi's Balder re-development will account for over 50% of this new volume. Norway will bring six new start-ups online, the largest being Equinor's 136 million boe Irpa gas field.
The UK could produce over 1 million boe/d for the last time in 2026. New investment at Captain and Clair will boost output while Murlach, Penguins and Victory ramp up. Adura's 72 million boe Jackdaw project will be the UK's biggest start-up, contingent on government environmental approval.
Consolidation drives UK deals but makes Norway M&A challenging: The UK market is shifting toward more transformative M&A as companies decide their future following the recent budget. UK-focused players, particularly Adura, NEO NEXT+ and Ithaca Energy, will continue to be aggregators of more assets and more companies. The NEO NEXT and TotalEnergies UK merger was the latest major deal. Apache, Chevron and CNOOC are the most likely exit candidates as the UK struggles to compete for capital.
Norway will remain a closed swap-shop. DNO's US$1.6 billion acquisition of Sval Energi aside, large transactions have dried up over the last two years. Asset swaps have become the deal of choice as companies optimise portfolios by aligning partnerships and adding incremental production or pre-FID opportunities.
Norway dominates North Sea exploration and appraisal: North Sea exploration is almost exclusively a Norwegian endeavour as it remains one of the world's hotspots for offshore drilling. Operators will drill over 30 exploration wells targeting almost 1.3 billion boe of prospective resources in Norway in 2026. Total unrisked prospect valuations could exceed NPV10 US$2.5 billion. Most exploration will target Norway's Northern North Sea and Mid Norway basins, where opportunities have clearer paths to development. Equinor's Vikingskipet and Arkenstone prospects, both with pre-drill estimates near 200 million boe, are the major wells to watch.
Appraisal could unlock over 1.5 trillion ft3 of gas supply. Wells on the Afrodite, Carmen and Norma discoveries could accelerate projects and form a new Northern North Sea cluster development. No exploration wells were drilled on the UK Continental Shelf in 2025, the first time since the early 1960s.
Lower gas prices could trigger new UK fiscal changes, while Norway gets Scope 3 clarity: After three years of fiscal turmoil, 2026 will seem quiet by comparison for the UK. There is now more clarity on the future fiscal system and potential upside for operators. The UK Energy Profits Levy sunset could come sooner if gas prices fall faster than predicted. Two consecutive quarters below 59 pence per therm would end the EPL and activate the government's less onerous windfall mechanism.Norway will update on Scope 3 emissions reporting following a legal case between Greenpeace and the government. The most recent ruling invalidated approval of the Breidablikk, Tyrving and Yggdrasil fields. New assessments must be resubmitted. Those reports will likely form the basis of how new projects are assessed and approved in Norway. The outcome is uncertain but the risk to Norway's ambitions appears low, for now.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/22012026/wood-mackenzie-reveals-five-north-sea-upstream-themes-to-look-out-for-in-2026/