The trade body Offshore Energies UK has called for significant changes to how the oil and gas sector is taxed and regulated. Currently, fossil fuel companies are subject to the energy profits levy, a windfall tax implemented in 2022 following record industry profits during the energy crisis triggered by international events. OEUK is requesting that this tax be replaced in 2027 rather than in 2030, with a new framework that would impose a 35% tax on revenue only when prices exceed a certain threshold.
The industry argues that accelerating the tax change would encourage substantial investment in North Sea operations. According to OEUK projections, the transition could generate up to £50bn in investment and create approximately £14.9bn in additional tax revenue over the next decade, though only £2.4bn would come directly from levies on oil and gas companies. The organization contends that such measures would support employment and reduce British dependence on imported natural gas.
OEUK’s chief executive acknowledged the challenging political context, noting that calling for tax relief during a period of elevated energy costs presents difficulties. He emphasized, however, that the proposed new levy would ensure companies pay substantial taxes during price increases while maintaining incentives for capital expenditure. The industry also seeks government approval for two major projects, the Rosebank and Jackdaw fields, as part of its broader push for regulatory flexibility.
Environmental and advocacy groups have strongly opposed the industry’s proposals. A coalition including Greenpeace and Tax Justice UK has previously urged the government to strengthen windfall tax provisions rather than weaken them, advocating for revenue to support cost-of-living assistance. Critics contend that requesting tax relief while companies report record profits during climate concerns represents an attempt to redirect public resources away from households already struggling with energy expenses.
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