Key facts
- The North Sea oil and gas industry wants the windfall tax scrapped three years early, in 2027.
- The industry proposes replacing the current tax with a narrower levy applied only during price spikes.
- OEUK is also pressing for approval of the Rosebank and Jackdaw oil and gasfields.
- The current energy profits levy was introduced in 2022.
- OEUK estimates bringing the tax change forward could prompt up to £50bn of investment in the North Sea.
- Greenpeace and Tax Justice UK have called 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 Labour party to dismantle the current windfall tax on fossil fuel firms three years ahead of schedule, proposing its replacement with a more targeted levy. OEUK wants the energy profits levy, introduced in 2022 following record profits spurred by high oil and gas prices after Russia's invasion of Ukraine, to be replaced in 2027 rather than 2030. The proposed successor, the oil and gas revenue levy, would tax revenue at 35% only when prices exceed a set threshold.
Alongside tax reforms, OEUK is also pressing for government approval of two significant North Sea projects: the Rosebank and Jackdaw fields. The industry body argues that these changes would stimulate up to £50 billion in investment in the North Sea, safeguard industrial jobs, and enhance the UK's energy resilience by reducing reliance on imported natural gas. OEUK projects that these measures could generate an additional £14.9 billion in tax revenue over the next decade, though only £2.4 billion of this is expected to come directly from oil and gas companies, with the remainder attributed to job creation.
However, the proposals face opposition from environmental groups and charities. A coalition including Greenpeace and Tax Justice UK has advocated for strengthening, not easing, the windfall tax to fund cost-of-living support. Greenpeace campaigner Rudy Schulkind criticized the industry's request for tax breaks during a climate emergency and periods of high energy prices for consumers, calling it 'staggering audacity'. Companies like Shell and BP have recently reported substantial profits, which Global Witness has characterized as 'cashing in on human misery'. David Whitehouse, OEUK's chief executive, acknowledged the timing challenges but argued the proposed levy would ensure high tax contributions during price spikes while encouraging investment, ultimately benefiting the UK economy.