Key facts
- The UK's North Sea oil and gas industry wants the current windfall tax to be replaced by a narrower levy from January 2027, three years earlier than planned.
- Offshore Energies UK (OEUK) estimates this change could unlock £50 billion in investment and generate an additional £14.9 billion in tax revenue over the next decade.
- The proposed Oil and Gas Revenue Levy would tax revenue at 35% when oil prices exceed $90 a barrel and gas prices exceed 90p per therm.
- OEUK argues that the current tax regime is unpredictable and driving away investment, making the UK more dependent on imports.
- Environmental groups like Greenpeace and Tax Justice UK are calling for the windfall tax to be strengthened, not eased.
The UK's North Sea oil and gas industry, represented by Offshore Energies UK (OEUK), is urging the government to implement a new fiscal regime from January 2027, three years earlier than currently planned. This proposed change would replace the existing Energy Profits Levy with a narrower Oil and Gas Revenue Levy (OGRL), which would be triggered by price spikes. OEUK argues that the current tax framework, which has seen multiple changes since 2022, is unpredictable and deters investment, potentially increasing the UK's reliance on imported oil and gas.
The OGRL would impose a 35% levy on revenues when oil prices exceed $90 a barrel and gas prices exceed 90p per therm, in addition to the existing 30% corporation tax and 10% supplementary charge. OEUK estimates that introducing this regime in 2027, instead of 2030, could unlock up to £50 billion in private investment in the North Sea, support jobs, and enhance energy security. The group projects this shift could generate an additional £14.9 billion in tax revenue over the next decade, with £2.4 billion directly from oil and gas companies and the remainder from associated payroll taxes.
However, environmental groups such as Greenpeace and Tax Justice UK oppose easing the tax burden. They advocate for strengthening the windfall tax to fund cost-of-living support and criticize the industry's request for tax breaks during a climate emergency and periods of high consumer energy prices. Companies like Shell and BP have recently reported significant profits, which have drawn criticism from campaign groups.