In 2022, the UK raised the profits tax on North Sea oil and gas producers from 40 to 75 percent through 2028, raising $3.51 billion in its first year. Proceeds are partially directed as rebates to homeowners to partly cover the cost of inflated heating bills.
Offshore Energies UK (OEUK), the trade association of the nation’s more than 400 offshore industries and organizations, estimates the move drove 90 percent of offshore energy firms to reduce spending in the region and that a continued lack of investment would lead to production cuts of 80 percent by 2030.
For the first six months of 2023, UK North Sea oil and gas production plunged by 13 percent from year-ago levels. Leading UK-based North Sea producers, including Harbour Energy and Apache, already have begun large layoffs as a result of the tax.
Apache also stopped drilling there in June. The contagion has spread to some offshore helicopter operators in the region, including Offshore Helicopter Services (OHS), which similarly has announced layoffs.
The UK’s opposition Labour Party has indicated that if it wins this year's general election it plans to extend the offshore tax and raise the rate to 78 percent as a partial method of funding green energy projects. OEUK opposes this move, claiming it would irreparably harm offshore oil and gas and make the UK more energy-dependent on foreign sources.
OEUK believes the country can become energy independent and meet emission reduction goals before 2050 by focusing on offshore sources combined with a strategic investment of $254 billion over the next decade. In a recently released policy document, the group recommends a series of initiatives designed to deliver more green energy in the coming decades. They include investment, tax incentives, regulatory reform, and workforce development.
“Choosing an energy transition, which is homegrown instead of imported has the potential to turbocharge our economy, support jobs, champion our world-class supply chain, and deliver reliable supplies of clean energy in the UK. Our plan for a homegrown energy transition shows how, with the right support from all parties, our world-class offshore energy can remain a national strategic asset and lead the world,” OEUK said.
The group recommends a blend of energy sources—including oil and gas, wind, and hydrogen—as well as adopting new carbon capture technologies. Its near-term goal is to domestically produce half of the UK’s total energy needs by 2030 and meet its net-zero emissions goal before 2050.