OEUK calls for swift removal of oil and gas windfall tax

Offshore Energies UK (OEUK) is calling on the UK government to remove its windfall tax on oil and gas profits of North Sea field developers by 2026. 

Instead, the association suggests a competitive long-term mechanism that responds to future price shocks to stimulate the investment needed in the UK’s energy future.

A government consultation on developing a predictable response to future oil price shocks closed on May 28. The government had proposed a timeline of 2030 for introducing the new mechanism.

The Energy Profits Levy (EPL) was introduced by the previous Conservative administration following the surge in global energy prices in May 2022. This is an additional tax on profits arising from oil and gas production in UK offshore waters, with a top rate of tax at 78%.

According to OEUK, data from the Office of National Statistics has confirmed that profits for those investing in the UK oil and gas sector are now down to negative levels.

With Britain relying increasingly on energy imports, a more pragmatic oil and gas tax regime would deliver more home-produced energy, OEUK said, while also strengthening the UK’s energy sovereignty.

A supportive government policy would also increase the likelihood of investment into floating offshore wind, carbon capture and hydrogen.

OEUK is pressing the government to act in the next budget during the fall.

CEO David Whitehouse said, “Last year, the UK was dependent for almost 40% of total energy demand on imported energy, and UK energy prices are higher than many of our counterparts. In an uncertain world, that is not the place to be.

“In a country where today 75% of our energy comes from oil and gas, the solution is the responsible production of our own oil and gas from the North Sea, alongside the buildout of renewable energy. It should not be a debate about one form of energy versus another—we need it all.

“The sector needs action now to secure jobs, boost energy security and build for the future. That means a commitment from government to deliver a mechanism in 2026 that creates a predictable response to future price shocks.”