North Sea Producers Push Prime Minister to Scrap Windfall Tax

Offshore Energies UK (OEUK) has called on U.K. Prime Minister Andy Burnham to replace the existing Energy Profits Levy with a price-triggered levy and approve two major North Sea projects to unlock 111 projects and £50 billion in investment, according to OilPrice.

Since taking office, the Labour Party has heavily taxed oil and gas companies in the U.K. North Sea and restricted new fossil fuel developments. However, industry executives argue that increased domestic production could help offset import needs, noting that domestic supplies are expected to meet just one-third of U.K. demand until 2050.

Industry Proposals and Opposition

OEUK advocates abandoning the Energy Profits Levy next January and introducing an Oil and Gas Revenue Levy triggered only during price spikes. The organization also seeks approval for the controversial Rosebank and Jackdaw projects, which are owned by a joint venture between Equinor and Shell known as Adura.

Environmental groups and researchers have strongly opposed the push. Research for Global Witness indicated the proposed levy would raise £8.6 billion less than the current tax by 2030 at $100 oil, and nothing at $70. Meanwhile, Imperial College London researcher Luke Hatton suggested that approving the fields would generate economic damage outweighing potential benefits.

Political and Economic Outlook

Prime Minister Andy Burnham has yet to make a decision on Rosebank and Jackdaw. During the Makerfield by-election in June, Burnham stated he was open-minded about new North Sea oil licences and has recently promised to take a pragmatic approach to the basin.

Proponents of the drilling, including EDF Energy boss Simone Rossi, argue that local production creates jobs and increases government tax receipts to assist consumers with rising energy bills, adding that local fossil fuels carry lower emissions than imported alternatives.

Key facts

• OEUK proposes replacing the Energy Profits Levy with a price-triggered Oil and Gas Revenue Levy in January.
• Approving Rosebank and Jackdaw could unlock 111 projects and £50 billion in investment, according to OEUK.
• Global Witness research shows the proposed levy would raise £8.6 billion less by 2030 at $100 oil and nothing at $70.
• U.K. domestic supplies are projected to meet one-third of demand until 2050 under current limits.