The North Sea oil and gas sector’s trade body has petitioned the Labour government to eliminate the windfall tax three years ahead of schedule, proposing its replacement with a more limited levy that would activate only during price spikes.
Currently, the energy profits levy taxes fossil fuel companies at elevated rates. The industry organization proposes transitioning to an oil and gas revenue levy in 2027 instead of the planned 2030 timeline, which would impose a 35% tax on revenue when prices exceed specified thresholds. The sector also seeks governmental approval for two major development projects, Rosebank and Jackdaw, alongside broader regulatory reforms.
The request arrives as Britain anticipates another period of elevated energy costs, with household bills projected to reach their highest level in three years. Wholesale gas prices have climbed significantly, and major energy companies have reported substantial profits following recent geopolitical developments. Industry representatives acknowledge the sensitivity of advocating for tax relief during a challenging period for consumers and emphasize that the proposed system would maintain high tax obligations when market conditions are favorable while incentivizing capital expenditure.
The trade body projects that accelerating the tax change could generate approximately £50 billion in North Sea investment and yield up to £14.9 billion in additional tax revenue over the next decade compared to current projections, though the majority of this would derive from economic activity rather than direct company levies. Environmental and consumer advocacy groups have countered this position, arguing that the windfall tax should be strengthened rather than relaxed to fund assistance programs for households facing financial hardship.
A final determination on one of the proposed projects is expected to be postponed until after an upcoming parliamentary election.
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