Contribution to the UK Economy

Gross Value Added, Capital Investment and Expenditure

The UK’s offshore oil and gas industry continues to be the single most important contributor to the industrial sector of the UK economy both in terms of its contribution to economic activity and capital investment. In 2003, the latest year available, the oil and gas industry contributed 13% of total gross value added (GVA) and 22% of the total industrial investment of the production industries. GVA measures the contributions to the economy of each industry or sector in the United Kingdom; GVA plus taxes minus subsidies equals GDP (Gross Domestic Product). At £25 billion, the GVA of the oil and gas industry accounted for 2.5% of the total GVA for the UK in 2003 and will form an increasing share of the UK economy in 2004 and 2005 as a result of higher oil and gas prices.

Figure 5: UK Oil and Gas Industry Gross Value Added & Investment

Since its beginning in the mid-1960s, the upstream oil and gas industry has invested heavily in field development and exploration (£219 billion in 2004 prices) and has spent over £110 billion in operations.

Figure 6: UK North Sea Expenditure (2004 Prices), 1970-2004