The North Sea oil and gas industry is navigating turbulent waters as it faces increasing calls for changes to the UK’s fiscal policy on fossil fuel companies. The industry is urging the UK government to reconsider the timeline for the windfall tax, which was introduced in the wake of soaring energy prices following Russia’s invasion of Ukraine. Offshore Energies UK (OEUK), the trade body representing the sector, is advocating for the windfall tax to end in 2027 instead of the planned 2030, with the aim of fostering investment and economic growth.
Under the current regime, the Energy Profits Levy imposes a 35% tax on the revenue of oil and gas companies when prices are high. OEUK proposes a revision to this system, suggesting a narrower tax that would only apply when prices exceed a certain threshold. This change, according to OEUK chief executive David Whitehouse, is designed to maintain higher taxation in times of elevated prices while simultaneously encouraging investment in the sector.
OEUK argues that advancing the end of the windfall tax could attract as much as £50 billion in new investment in the North Sea, potentially supporting thousands of jobs in the industry. Additionally, the organization estimates that such a move could generate up to £14.9 billion in additional tax revenue over the next decade, factoring in the economic activity spurred by new investments.
Part of OEUK’s strategy includes advocating for the approval of the Rosebank and Jackdaw oil and gas projects. The group believes that increasing domestic production could significantly reduce the UK’s dependence on imported natural gas, enhancing energy security amid global supply uncertainties.
However, the proposal faces opposition from environmental organizations and other advocacy groups. Greenpeace, among others, has called for the government to strengthen the windfall tax rather than reduce it. They argue that oil and gas companies should contribute more to address the high living costs and energy prices burdening households across the UK.