Offshore staff
EDINBURGH, UK — Representatives from Britain’s oil and gas producing companies and trade association Offshore Energies UK (OEUK) have been in talks today with senior Treasury ministers and officials.
They have been discussing the ramifications of the government’s recent decision to raise the Energy Profits Levy, imposed earlier this year, by a further 10% to 35%.
OEUK says the levy is already deterring investment in the UK offshore sector, as evidenced by TotalEnergies’ plan to cut UK investment by 25% in 2023.
The meeting marks the reinstatement of the "Fiscal Forum," a group that brings together the UK Treasury and the industry. Senior officials from the Department for Business, Energy and Industrial Strategy also were expected to attend the event in Edinburgh.
The forum’s declared aim is to maximize the output of oil and gas from waters surrounding the UK to safeguard energy security. However, the Energy Profits Levy lifts total petroleum taxes on profits from UK production to 75%, one of the highest worldwide.
OEUK warns that without the required investment, UK gas production could halve by 2030, making Britain even more dependent on imports. The association maintains that "windfall taxes" should only apply to windfall profits, so if prices and profits decline the tax should be scrapped, and claims that view is shared widely across the industry.
OEUK chief executive Deirdre Michie planned to submit these key requests to ministers in today’s meeting:
- Remove the windfall tax on UK production when oil and gas prices fall back to normal levels;
- Restore investor confidence by committing to a predictable tax regime; and
- Engage with the industry long term, a process that should include building a lasting consensus with other political parties and stakeholders.
Michie added, “Our message to [Chancellor] Jeremy Hunt is that the windfall tax has made it far riskier to the point where energy companies are deciding to invest overseas rather than here…This is a potential slow disaster for the UK. If investment falls now, then in a few years' time, our gas and oil production will plummet.”
12.09.2022
