The North Sea oil and gas sector is calling on the UK government to terminate the windfall tax on fossil fuel companies by 2027, three years earlier than initially planned. The industry argues that this change could spur significant investment, enhancing the sector’s economic contributions.
Offshore Energies UK (OEUK), representing the industry’s trade interests, has suggested replacing the current Energy Profits Levy with a more targeted tax. This proposed levy would activate only when oil and gas prices surpass a predetermined threshold. The Energy Profits Levy, established in 2022 following a surge in energy prices due to Russia’s invasion of Ukraine, currently imposes a 35% levy during high-price periods.
David Whitehouse, OEUK’s chief executive, believes the proposed taxation system would maintain elevated taxes when prices are high while offering better investment incentives. According to OEUK, an earlier change could attract investments up to £50 billion in the North Sea and support job growth across the industry. The organization also forecasts an additional £14.9 billion in tax revenue over the next decade, factoring in new job creation linked to increased investment.
Beyond tax changes, OEUK is advocating for the approval of the Rosebank and Jackdaw oil and gas projects. The group asserts that boosting domestic production could decrease the UK’s reliance on imported natural gas, contributing to energy security.
However, this position faces opposition from environmental groups like Greenpeace, which argue for the reinforcement rather than reduction of the windfall tax. They contend that oil and gas companies should contribute more to alleviating households’ high living costs and energy prices.