The offshore energy industry has made a formal request to the government to eliminate its current windfall tax and replace it ahead of schedule with a more targeted levy structure. Offshore Energies UK, which represents the sector, proposes scrapping the energy profits levy in 2027 rather than 2030, replacing it with an oil and gas revenue levy that would apply a 35% tax on revenues only during periods of elevated prices above a specified threshold.
The timing of this request coincides with expectations of another winter marked by elevated household energy costs. Wholesale gas prices have recently climbed to levels not seen since the Russia-Ukraine crisis, with energy bills projected to reach three-year highs. Industry representatives acknowledge the political sensitivity of seeking tax relief during a period of economic strain for consumers, with OEUK chief executive David Whitehouse noting that “from the consumer’s point of view… you can argue that it is a difficult time to make these arguments.”
The industry group contends that the proposed change would encourage North Sea investment while maintaining substantial tax contributions when commodity prices are elevated. OEUK estimates the shift could generate up to £50bn in investment and produce £14.9bn in additional tax revenue over the next decade compared to current plans, though only £2.4bn would directly come from oil and gas company levies. The remainder would derive from projected tax revenues associated with jobs the organization says would result from expanded investment.
The request also includes calls for government approval of two major projects, Rosebank and Jackdaw, which OEUK argues would reduce the nation’s reliance on imported natural gas. A decision on Jackdaw has been delayed and is now expected following next month’s Holborn and St Pancras byelection.
Environmental and advocacy organizations have opposed the industry’s position, arguing against reducing taxation on energy companies posting record profits. Campaign groups including Greenpeace and Tax Justice UK previously urged the government to strengthen windfall tax provisions to support cost-of-living assistance for households rather than ease them.
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