Thousands of Business Figures Call for Immediate End to UK EPL

More than 2,500 business figures have called for an “immediate end” to the UK government’s Energy Profits Levy (EPL) in an open letter, which was posted on the Aberdeen & Grampian Chamber of Commerce (AGCC) website.

“Dear Prime Minister, it is almost exactly a year since you publicly insisted that your party’s plans for the North Sea would not cost jobs,” the letter, signed by several chairs, directors, and chief executives, including AGCC Chief Executive Russel Borthwick, reads.

“On 7th May, the largest independent operator in the UK Continental Shelf, Harbour Energy, announced plans to cut its workforce by 25 percent with 250 roles in Aberdeen being placed at risk,” it states.

“This is a devastating blow for the economy across the region, and the government should be concerned that with continued job losses in the North Sea the UK’s long-term energy security is threatened,” it adds.

“Harbour Energy has been clear that they have come to the decision as a direct result of the punitive Energy Profits Levy. For years oil and gas companies have argued that it is hemorrhaging investment in the sector, a policy that OEUK analysis shows has, so far, cost 10,000 jobs since its inception, whilst in the same period the price of Brent Crude oil has nearly halved,” the letter continues.

“This, along with the fact that in the last 10 days a further 300 jobs have been lost across our region at subsea engineering supply chain firms, serves as an important reminder that our energy sector is highly integrated,” it notes.

“In short, we are at grave risk of losing the world-class company and skills base that will be required to deliver offshore wind, green hydrogen, and carbon capture projects at pace at such time they are available commercially at scale,” the letter warns.

The letter goes on to state that “we find ourselves in the economically and environmentally incoherent position whereby government policy is bringing a premature end to the oil and gas sector whilst the UK simultaneously relies on increasing amounts of carbon heavy and costly imports from overseas to meet its energy needs”.

It adds that “the situation is absurd” and urges the UK Prime Minister “to act now before it’s too late”.

“Please confirm an immediate end to the Windfall Tax and unlock the investment required to protect jobs, generate economic growth, and greater energy and national security for the UK”.

Rigzone contacted HM Treasury (HMT), the UK Department for Energy Security and Net Zero (DESNZ), the Cabinet Office (CO), and OEUK for comment on the open letter.

In response, a Treasury spokesperson told Rigzone, “the government has given the oil and gas sector certainty by confirming the windfall tax on the industry will end in 2030 – or sooner if prices drop enough to trigger its removal”.

“The government recognizes oil and gas production in the North Sea will be with us for decades to come and is committed to managing the energy transition in a way that supports jobs in existing and future industries,” the spokesperson added.

OEUK CEO David Whitehouse told Rigzone, “this is a difficult time for the people, their families, and the communities affected by these job losses”.

“There is another path – one where government policies make the most of domestic oil and gas rather than imports as we build out renewables. This is the path on which we encourage companies to invest in homegrown energy, support jobs, grow the economy and help the country on its journey to net zero,” he added.

“As the Prime Minister has said, the UK will continue to use oil and gas for decades to come. Our choice is whether we produce that oil and gas here or increasingly rely on imports,” he continued.

“We must support our own workforce, with measures including issuing new oil and gas licenses, enabling renewable projects, and ending the Energy Profits Levy,” he said.

“The government is currently engaging on the future of the North Sea through major consultations. The decisions made will shape our industry and economy for decades to come. These decisions are urgent. We must get them right,” Whitehouse went on to state.

The CO directed Rigzone to DESNZ for comment on the open letter. DESNZ has not responded to Rigzone’s request for comment on the open letter at the time of writing. Rigzone also contacted HMT, DESNZ, and the CO for comment on Whitehouse’s statement. The CO directed Rigzone to DESNZ for comment on this statement. DESNZ and HMT have not responded to this request at the time of writing.

Earlier this month, Harbour Energy told Rigzone that it expects to cut around 250 jobs.

“Harbour is launching a review of its UK operations, which we expect to result in a reduction of around 250 onshore roles in our Aberdeen-based business unit,” Scott Barr, the managing director for Harbour Energy’s UK business unit, said in a statement sent to Rigzone on May 7.

“The review is unfortunately necessary to align staffing levels with lower levels of investment, due mainly to the government’s ongoing punitive fiscal position and a challenging regulatory environment,” he added.

Rigzone asked HMT and DESNZ for comment on Barr’s statement at the time. Responses from HMT and DESNZ to that statement can be seen here.

In a statement made on March 5, which was posted on the UK parliament website, James Murray, the Exchequer Secretary to the Treasury, noted that the EPL was introduced in 2022 “in response to extraordinary profits made by oil and gas companies driven by global events, including resurgent demand for energy post-Covid 19 and the invasion of Ukraine by Russia”.

“The EPL will end in 2030, or earlier if the EPL’s price floor, the Energy Security Investment Mechanism, is triggered,” the statement added.

In that statement, Murray highlighted that HMT and HM Revenue and Customs had published a consultation on how the oil and gas fiscal regime “will respond to future oil and gas price shocks once the EPL ends”. The consultation closes on May 28.

“The government is committed to ensuring that there is a new permanent mechanism in place to respond to future oil and gas price shocks,” Murray said in the statement.

“This new mechanism will form an integral part of the fiscal regime, responding only when there are unusually high prices. This will also ensure that the oil and gas industry has the certainty it needs on the future fiscal landscape helping to protect businesses and jobs now and for the future,” he added.

“The consultation sets out the government’s policymaking objectives and design options for a new mechanism inviting stakeholder feedback. The government will work together with the sector and others to ensure we take account of as wide a range of views as possible during this consultation,” Murray continued.

To contact the author, email andreas.exarheas@rigzone.com