The North Sea oil and gas sector is calling on the UK government to expedite the cessation of the windfall tax on fossil fuel companies, proposing an end date in 2027 rather than the currently planned 2030. According to Offshore Energies UK (OEUK), the industry’s trade body, an earlier termination could stimulate significant investment in the region.
OEUK has suggested replacing the existing Energy Profits Levy with a more targeted tax that would be activated only when oil and gas prices exceed a certain threshold. This levy was originally introduced in 2022 after energy companies reported substantial profits following a price surge in the wake of Russia’s invasion of Ukraine. Under the new proposal, a 35% tax would be imposed on revenues during periods of high prices, balancing increased taxation with incentives for investment, according to OEUK chief executive David Whitehouse.
The organization estimates that advancing the timeline for this tax change could potentially attract up to £50 billion in new investment into the North Sea. Furthermore, the group projects that this could generate up to £14.9 billion in additional tax revenue over the next decade, including benefits from jobs created through new investments.
Additionally, OEUK is advocating for the approval of significant projects such as the Rosebank and Jackdaw oil and gas developments, arguing that boosting domestic production could decrease the UK’s dependence on imported natural gas.
However, the proposal has met with opposition from environmental groups, including Greenpeace, which argues that the windfall tax should be strengthened rather than reduced. These groups assert that oil and gas companies should make greater contributions to alleviate the financial burdens on households facing high living costs and energy expenses.