According to Oil and Gas Journal (OGJ), the UK had 4.0 billion barrels of proven crude oil reserves in 2006, the most of any EU member country. The UK consumed 1.8 million barrels per day (bbl/d) of oil in 2005, mostly flat from the previous year. The importance of oil to the UK economy has declined slightly over the past two decades, with oil's contribution to total energy consumption falling from in 37 percent in 1983 to 35 percent in 2003.

The UK Continental Shelf (UKCS), located in the North Sea off the eastern coast of the UK, contains the bulk of the country's oil reserves. There are also sizable reserves in the North Sea north of the Shetland Islands, with smaller amounts in the North Atlantic. Besides these offshore assets, the UK also has the Wytch Farm field, the largest onshore oil field in Europe.

Total oil production (including condensates, natural gas liquids, and refinery gain) in the UK was 1.87 million bbl/d in 2005, a 10 percent decline from 2004 and 37 percent below the peak of production in 1999. The UK government expects oil production in the country to continue to decline, reaching 1.38 million bbl/d by 2009. Reasons for this decline include 1) the overall maturity of the country’s oil fields, 2) the application of new crude oil extraction technologies that lead to field exhausted at a quicker rate, and 3) increasing costs as production shifts to more remote and inhospitable regions.

Most of the UK crude oil grades are light and sweet (30° to 40° API), which generally makes them attractive to foreign buyers. The UK has been a net exporter of crude oil since 1981. According to the British Department of Trade and Industry (DTI), the largest destinations of crude oil exports in 2004 were the United States (28 percent), the Netherlands (21 percent), Germany (17 percent), and France (14 percent). Much of the crude oil exported to the Netherlands is not actually consumed there, but rather sold at the Rotterdam spot market. In 2005, the UK exported 219,000 bbl/d of crude oil and 167,000 bbl/d of petroleum products to the U.S., contributing 2.2 percent and 4.8 percent to total U.S. crude oil and petroleum product imports, respectively.

BP is the largest oil producer in the UK, with 26 fields producing a total of 471,600 bbl/d in 2004, according to OGJ. BP also operates the single-largest oil field in the UK, Schiehallion, with 2004 production of 98,900 bbl/d. Other large oil producers in the UK include Shell, ChevronTexaco, and Total.

As UK oil fields mature, the industry has shifted focus from discovering new reserves to increasing the productivity of existing fields and developing smaller, previously avoided ones. This trend has prompted oil major such as BP and Shell to begin selling their UK assets in order to focus on high growth, international opportunities. The result has been the entry into the UK oil sector of many smaller operators. In 2003, U.S.-based Apache purchased BP's Forties field for $630 million, and other smaller operators, such as Talisman, Perenco, and Paladin Resources, have acquired significant production assets in the country. In late 2004, EnCana announced that it would sell its North Sea assets to Canada-based Nexen for $2 billion. In 2005, Denmark’s Maersk Oil and Gas and UK natural gas company Centrica purchased the North Sea assets of U.S.-based Kerr McGee for $3 billion. These companies find smaller and maturing fields more economically viable than do the oil majors, because they have lower overhead costs, are more flexible, and often employ newer production and recovery technologies.

There is an extensive network of pipelines in the UK to carry oil extracted from North Sea platforms to coastal terminals in Scotland and northern England. BP operates the 110-mile, 36-inch Forties-Cruden Bay pipeline, linking fields in the Forties system to the oil terminal at Cruden Bay, Scotland. The company also operates a 110-mile, 36-inch pipeline connecting the Ninnian system to the Sullom Voe oil terminal on Shetland Island. Total operates a 150-mile, 24-inch pipeline linking the Bruce and Forties fields to Cruden Bay and a 130-mile, 30-inch pipeline connecting the Piper system with Flotta on Orkney Island. Shell and Esso jointly operate a 93-mile, 36-inch connection between the Cormorant oil field and Sullom Voe. Talisman Energy owns a 37-mile, 16-inch pipeline connection between its Beatrice field and the Nigg Bay oil terminal. There are also numerous, small pipelines that connect each North Sea oil platform to these major backbones. Finally, the UK does have a few onshore crude oil pipelines, including a 90-mile, underground pipeline operated by BP that links the Wytch Farm field to the refinery at Fawley and the nearby oil export terminal at Southampton.

The UK has a single international crude oil pipeline, the 220-mile, 34-inch Norpipe operated by ConocoPhillips. With a capacity of 900,000 bbl/d, Norpipe connects Norwegian oil fields in the Ekofisk system to the oil terminal and refinery at Teesside.

The UK had 1.9 million bbl/d of refining capacity in 2006, according to OGJ. ExxonMobil operates the single-largest refinery in the country, the 326,000-bbl/d Fawley facility in southern England. However, BP controls the largest total amount of refining capacity, with facilities in Grangemouth, Scotland (196,000 bbl/d) and Coryton, England (163,000 bbl/d). Other companies with significant refining capacity in the UK include Total (325,000 bbl/d), Shell (296,000 bbl/d), ConocoPhillips (221,000 bbl/d), and ChevronTexaco (210,000 bbl/d). According to DTI, refinery utilization in the UK was near 90 percent in 2004. The UK maintains an active international trade in refined petroleum products, exporting 36.1 million metric tons (mt) and importing 26.4 million mt in 2004.