(Bloomberg) – UK Prime Minister Keir Starmer has called his government’s 10-year industrial strategy “a turning point” for the nation’s economy, but for an oil and gas lobby the plan must include tax reform for North Sea energy producers.
David Whitehouse, CEO of Offshore Energies UK
A competitive tax structure alongside continued domestic oil and gas production is “the turning point we need,” David Whitehouse, chief executive officer of Offshore Energies UK, said at conference in Aberdeen, Scotland. The industry needs “a firm commitment from government” to deliver such long-term tax regime in 2026, he added.
British offshore oil and gas companies have been facing challenges amid declining production at the mature basin as well as several increases and extensions of the Energy Profit Levy, a windfall tax introduced by the Conservative cabinet in 2022. Last year the Labour government raised it to 38%, bringing the total tax paid by oil and gas producers to 78%. In response, some companies operating in the North Sea decided to consolidate or sell assets.
In spring, government officials discussed with the industry mechanisms that could replace the tax, which expires in March 2030.
“When you look at the decline in the basin, it’s wrong to wait until 2030,” Whitehouse said. “If you bring it forward, it will help to unlock significant investment in the basin.”
By waiting until 2030, “the supply chains can disappear” and “we can be doing more now,” said Chris Cox, chief executive officer of Serica Energy Plc. “The industry doesn’t need to be propped up by subsidies, unlike some other sources of energy. We just need not to have to work against insurmountable obstacles, which we seem to have in front of us repeatedly.”
With right decisions, the UK, which depends on imports for almost 40% of its energy, could supply half of its oil and gas needs from domestic sources, according to the group’s report earlier this year.
