The North Sea oil and gas industry is pressing the UK government to terminate the windfall tax on fossil fuel companies by 2027, three years earlier than planned. Offshore Energies UK (OEUK), representing the sector, argues that such an adjustment could boost investment in the industry. The group suggests replacing the Energy Profits Levy with a targeted tax that activates only when oil and gas prices exceed a certain level.
Introduced in 2022 following Russia’s invasion of Ukraine, the Energy Profits Levy was designed to capitalize on the substantial profits oil and gas companies amassed from the resultant surge in energy prices. OEUK proposes a revised structure where companies would incur a 35% levy during periods of elevated prices. David Whitehouse, OEUK’s chief executive, supports the idea as a balanced approach to maintain high taxation when necessary while fostering investment incentives.
OEUK estimates that advancing the tax revision could lead to £50 billion in new investments in the North Sea, consequently bolstering industrial employment. Furthermore, the group projects an additional £14.9 billion in tax revenue over the next decade, partly from job creation linked to fresh investments. Alongside tax changes, OEUK advocates for the approval of the Rosebank and Jackdaw oil and gas projects to enhance domestic production and reduce the UK’s dependency on imported natural gas.
However, environmental organizations, including Greenpeace, have pushed back against these proposals. They argue for a more stringent windfall tax to ensure oil and gas companies contribute more significantly to alleviating the burden of high living costs and energy prices on households.