EurOil: UK North Sea industry doubles down on criticism of windfall tax

The windfall tax imposed on the UK North Sea oil and gas industry last year will result in 500mn barrels of oil equivalent (boe) being left in the ground over the next decade that would otherwise have been developed, equal to one year of output in the basin, industry group OEUK said on March 28.

The tax, along with political uncertainty and inflation, “is driving away the billions of pounds of investments needed to maintain oil and gas production now and create low-carbon energy in the future,” the OEUK said in its new Business Outlook report, which estimated nine of 10 North Sea operators were slashing investment. The tax is now 75% of income, or three times imposed on conventional UK business.

“When prices fall, as is already happening, the ‘windfalls’ will disappear – but the tax will remain because it is locked in place till at least 2028,” OEUK CEO David Whitehouse said. “That makes these taxes a deterrent for investors. The same issue applies to offshore wind operators who face a similar windfall levy. Together these levies risk turning the North Sea, which should be the bedrock of the UK’s energy security, into an unattractive place to invest. Some projects will proceed but not the number we need for our energy security and jobs.”

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