Latest news with #EnergyProfitsLevy
Business News Wales
an hour ago
- Business
- Business News Wales
OEUK Calls for Windfall Tax Reform to Boost UK Energy Investment
Trade body Offshore Energies UK (OEUK) has called on the UK Government to remove the windfall tax on oil and gas profits by 2026. It is calling for it be replaced it with a competitive long-term mechanism that responds to future price shocks to encourage what it says is necessary investment in the UK's energy future. The call comes as the UK Government's consultation aimed at developing a predictable response to future price shocks closed. The Energy Profits Levy (EPL), known as the windfall tax, was introduced in response to a spike in global energy prices in May 2022. It's an additional tax on the profits made by companies producing oil and gas from the waters off the coast of Britain, with the top rate of tax at 78 per cent. Independent data from the Office of National Statistics confirms that the profits for those investing in the UK oil and gas sector have fallen to negative levels, but the tax remains, which OEUK says is holding back vital investment across the UK's energy landscape. Pointing to the UK's increasing reliance on imported energy, OEUK said that a pragmatic oil and gas tax regime would deliver more home-produced energy, protect jobs in the industry and across the wider economy, and strengthen the UK's energy sovereignty. In 2024, the UK's total energy production was at an historic low, with over 40% of UK's energy needs met through imports. Without stimulating investment, the UK could be reliant on imports for the majority of its oil and gas demand by 2030. OEUK has shown that supportive government policy towards UK oil and gas production increases the likelihood of a successful domestic expansion into other energy forms including floating offshore wind, carbon capture and hydrogen. OEUK is pressing the UK Government to act in the next Autumn Budget. It's calling for a mechanism to be introduced in 2026 that responds to price shocks and gives companies certainty to invest long term. OEUK chief executive David Whitehouse said: 'Last year, the UK was dependent for almost 40% of total energy demand on imported energy, and UK energy prices are higher than many of our counterparts. In an uncertain world that is not the place to be. 'In a country where today 75% of our energy comes from oil and gas, the solution is the responsible production of our own oil and gas from the North Sea, alongside the build out of renewable energy. It should not be a debate about one form of energy versus another – we need it all. 'We welcomed the Government's decision to launch this fiscal consultation and we're engaging constructively in the process. 'The sector needs action now to secure jobs, boost energy security, and build for the future. That means a commitment from government to deliver a mechanism in 2026 that creates a predictable response to future price shocks. 'This is what is needed to unlock investment in UK energy – oil, gas, renewables, hydrogen, and carbon capture. 'The North Sea is a strategic national asset that has powered the UK economy and homes through for the past 50 years and it is only right that it is managed as such.'
Gulf Insider
6 days ago
- Business
- Gulf Insider
North Sea Oil Producer Slams The UK's Windfall Tax
The chief executive of Enquest criticizes the UK's Energy Profits Levy, claiming it is doing 'irreversible damage' to the oil and gas industry and discouraging investment. Due to the heavy tax burden, the company is planning a 'disciplined approach' to investment and expects to pay a significant amount in windfall tax in June 2025. Enquest argues that the UK is the only country levying a windfall tax on its domestic energy producers where no windfall profits exist, further impacting competitiveness. The boss of Enquest has slammed the windfall tax on oil and gas firms as doing 'irreversible damage' to the industry and 'driving job losses across the sector'. Amjad Bseisu, Enquest's chief executive, called for the North Sea tax to be scrapped in an operations update on Tuesday after claiming it makes the UK a less attractive place to invest. The UK Energy Profits Levy (EPL) was introduced in May 2022 and applies to oil and gas companies operating in the North Sea. It is designed to tax the extra profits these companies made due to surging energy prices after Russia's invasion of Ukraine. Initially, the rate was 25 per cent, but it later jumped to 35 per cent in January 2023. The tax has been extended by Chancellor Rachel Reeves to run until March 2030, but has a 'price floor' mechanism, which allows it to end early if prices fall significantly. London-listed company Harbour Energy slammed the government's 'punitive fiscal position' earlier this month as it axed 250 jobs in Aberdeen. Bseisu argued: 'The recent stepdown in commodity prices has further amplified calls for the UK government to remove the Energy Profits Levy and return the North Sea to a position of global competitiveness.' The World Bank last month forecasted that weakening global growth amidst geopolitical turmoil was set to push commodity prices down 12 per cent in 2025, followed by another five per cent in 2026. This would mark the lowest levels of the 2020s and bring an end to the price boom fuelled by the COVID-19 pandemic recovery and the Russia and Ukraine war. Bseisu said the UK was 'the only country levying a windfall tax on homegrown energy producers, where no windfall profits exist.' As a result of the heavy tax burden, the FTSE 250 firm has laid out a 'disciplined approach' to investment plans for the next 18 months. The company plans to pay nearly $100m (£73.7m) in windfall tax in June 2025, which would mean most tax payments for the year will be made in the first half. As a result, the firm expects cash outflows to to be lower in the final six months of the year. Enquest expects operating expenses to top $450m in 2025 but remains committed to 'ongoing' cost reductions. Bseisu said: 'We remain focused on delivering a material UK transaction in the short term, and we are resolute in our belief that our relative advantages, both operational and fiscal, see us ideally placed as a North Sea consolidator.'
The Herald Scotland
7 days ago
- Business
- The Herald Scotland
EnQuest slams windfall tax as Aberdeen oil and gas jobs lost
In an operations update, the company told stock market investors: 'We remain focused on delivering a material UK transaction in the short term,' adding that it is in 'ongoing discussions with multiple UK counter-parties'. The company released the update weeks after abandoning a bid to acquire North Sea-focused Serica Energy, which has a stock market capitalisation of £565m. EnQuest has seen its valuation fall to £212m following a drop of around a third in the price of the company's shares since March amid the volatility triggered by Donald Trump's tariff threats. READ MORE: Israeli-owned firm takes control of UK's biggest gas field Against that backdrop, the company said the windfall Energy Profits Levy was an increasingly unfair burden on firms which could have disastrous unintended consequences. "The recent stepdown in commodity prices has further amplified calls for the UK government to remove the Energy Profits Levy and return the North Sea to a position of global competitiveness,' said chief executive Amjad Bseisu in the update. 'The status quo, which sees the UK as the only country levying a windfall tax on homegrown energy producers, where no windfall profits exist, is resulting in irreversible damage to this strategic national industry and is driving job losses across the sector.' Earlier this month one of the biggest North Sea producers, Harbour Energy, announced plans to shed 250 jobs citing the continued challenging domestic fiscal and regulatory environment. In the update, EnQuest said it had launched a drive to cut costs to boost efficiency 'commensurate with a low commodity price environment'. The company did not elaborate on the implications for jobs in the North Sea operations it runs from Aberdeen. It has been approached for comment. READ MORE: SNP Government oil hypocrisy shocking amid Scottish jobs cull All the same, the update made clear that EnQuest still sees plenty of potential in the UK North Sea. 'We are resolute in our belief that our relative advantages, both operational and fiscal, see us ideally placed as a North Sea consolidator," said Mr Bseisu in the update. EnQuest became a significant force in the area after investing in assets it acquired amid tough times in the industry from firms that appeared to have lost interest in them, such as BP. EnQuest started production from the Kraken field off Shetland in 2017 (Image: EnQuest) The company's directors appear confident that the strategy makes sense amid the current downturn. This may create opportunities to acquire assets on attractive terms. Mr Bseisu's comment highlights the fact that EnQuest has accumulated historic losses that it can use to reduce the tax bills it will have to pay on the profits generated by its North Sea production operations. EnQuest incurred the losses amid moves to increase production from the assets it acquired. This has involved it drilling additional wells to help boost the recovery of reserves from existing fields and developing new ones such as Kraken. The company has continued with the strategy since the windfall tax was first introduced by the former Conservative Government in 2022. Mr Bseisu noted that EnQuest recently increased output from the Magnus field north east of Shetland to the highest level since 2022. The success reflected 'strong reservoir management and good infill drilling results'. EnQuest expects to start production from a further infill well on Magnus next month. The company acquired Magnus and related assets from BP in deals worth $385m in total in 2018, amid the slump in the area that started after oil prices plunged in 2016 as growth in supplies ran ahead of demand. READ MORE: North Sea drilling curb plans look mad amid Trump trade threats EnQuest acquired control of the undeveloped Bressay oil field east of Shetland from Equinor in July 2020 for an initial £2m, following the plunge in oil prices caused by the pandemic. In January EnQuest acquired Harbour Energy's Vietnam business in an $84m (£62m) deal. It has long had a presence in Malaysia. The company said it sees 'significant upside across its existing Asia portfolio, and is in advanced discussions around a further new country entry'. EnQuest made $94m profit after tax in 2024 on sales of $1.2bn. When EnQuest and Serica ended takeover talks early this month the companies said that market volatility had made it impossible to agree the terms concerned. READ MORE: North Sea oil giant plans $500m investor payouts as it cuts jobs Serica announced in March that it was in talks with EnQuest regarding a deal that would have created a company with increased scale, unlocked significant synergies and created a stronger platform for further growth. It was expected then that EnQuest would make an all-share offer for Serica.
Yahoo
7 days ago
- Business
- Yahoo
Miliband's North Sea shutdown causing ‘irreparable damage'
Ed Miliband's retreat from the North Sea is causing 'irreversible damage' to Britain's oil and gas industry, a leading energy producer has warned. Amjad Bseisu, chief executive of listed oil company EnQuest, criticised the Energy Secretary's windfall tax, claiming it had sparked a swathe of job losses. He has called for an urgent rethink on the levy as falling oil prices pile more pressure on North Sea firms, which are facing a 78pc tax on profits. Mr Bseisu said: 'The recent stepdown in commodity prices has further amplified calls for the UK Government to remove the Energy Profits Levy and return the North Sea to a position of global competitiveness. 'The status quo, which sees Britain as the only country levying a windfall tax on homegrown energy producers, where no windfall profits exist, is resulting in irreversible damage to this strategic national industry and is driving job losses across the sector.' His comments come as a growing number of North Sea producers consider cutting jobs and scaling back investment. This is partially in response to the Government's decision to increase the oil and gas windfall tax from 75pc to 78pc last year, while also extending the levy for an extra year to 2030. The industry has also been hammered by Mr Miliband's decision to ban all new drilling in the North Sea, as he seeks to prioritise investment in renewables to help Britain achieve its net zero targets. Mounting pressure led to Harbour Energy, the UK's largest oil and gas producer, announcing plans to cut 250 jobs in Aberdeen earlier this month. Scott Barr, managing director of Harbour Energy's UK business, blamed the job losses on 'the Government's ongoing punitive fiscal position and a challenging regulatory environment'. A new report also revealed that Britain's oil and gas industry is already suffering an exodus of staff. According to a survey by the Aberdeen and Grampian Chamber of Commerce, almost half of North Sea producers said their employees were leaving the UK to work abroad. They said the moves were caused by weak domestic confidence, uncompetitive government policy and a lack of viable projects in the UK. It comes after a separate analysis found last week that the windfall tax would leave 1.5bn barrels of oil and gas stuck in abandoned North Sea oil wells. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Scotsman
25-05-2025
- Business
- Scotsman
North Sea oil and gas: Why the bridge to the future is being burned, as 600 Aberdeen job losses show
The North Sea windfall tax must end before the next financial year, writes Bob Drummond. Sign up to our daily newsletter – Regular news stories and round-ups from around Scotland direct to your inbox Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... In the North-east of Scotland, we are not resisting the energy transition - we are leading it. Companies like D2Zero exist for that very purpose - supporting the safe maintenance and operation of current energy systems, while reducing emissions, developing clean technologies, and enabling the shift to a low-carbon economy. Advertisement Hide Ad Advertisement Hide Ad Our offshore energy industry is in decline, and hundreds of organisations and tens of thousands of people are trying to build a bridge over troubled water. But unlike the lyrics of the Simon & Garfunkel hit released as the UK's oil journey began in the 1970s, there's little to ease minds just now. The foundations we need to build that bridge to the future are being eroded. Over the past few weeks, 600 jobs have disappeared from the North Sea energy sector. You cannot drive forward an energy system fit for net zero while hollowing out the industries and expertise needed to build it. What's happening today is not a managed transition. It's a cliff edge. The Total Culzean platform in the North Sea, about 45 miles east of Aberdeen. Picture: Andy Buchanan/AFP via Getty Images We work at the heart of emissions reduction - deploying solutions and technology to help energy companies reduce their environmental impact whilst optimising their operations. Our entire business model is about helping industry do better, faster. But when the industry is undercut by policy, investment decisions stop. Innovation slows. And the energy transition we all want to see gets pushed further into the future. Advertisement Hide Ad Advertisement Hide Ad We need to talk about the Energy Profits Levy and, more importantly, the message it sends. When it was introduced in 2022, oil prices were at record highs and household bills were spiralling. The principle of a temporary windfall tax was broadly accepted. But three years on, prices have stabilised, bills remain high, and investment in UK energy is slowing. The levy now amounts to a 78 per cent tax burden on companies operating in UK waters - without the fiscal stability or investment relief seen in other nations. In Norway, for example, the government offers a 78 per cent rebate on exploration costs, meaning companies continue to invest with confidence. Advertisement Hide Ad Advertisement Hide Ad Here in the UK, we are doing the opposite. And the consequences are already being felt. Projects are being shelved. Capital is leaving. Jobs are disappearing. The supply chain - which is central not just to oil and gas, but to offshore wind, hydrogen, and carbon capture - is being compromised at the precise moment we need it most. READ MORE: North Sea leaders and energy workers urge Keir Starmer to scrap oil and gas windfall tax There's a misconception these are yesterday's industries. That the skills and capabilities developed over 50 years in the North Sea are somehow incompatible with a net zero future. The truth is the opposite. These are the people and businesses who can and will build that future. They are the ones who will lay the cables, engineer and build the platforms, deploy the carbon capture systems, and scale up hydrogen production. Without them, net zero doesn't happen. Advertisement Hide Ad Advertisement Hide Ad Meanwhile, credible analysts are warning the Energy Profits Levy (EPL) isn't just stalling the transition - it's actively damaging the UK economy. According to investment bank Stifel, the EPL is 'destroying' the North Sea oil industry, while simultaneously undermining energy security and long-term economic growth. The result has been a collapse in North Sea investment and - crucially - a sharp fall in the Treasury's total tax take. Energy prices have dropped significantly since the tax was introduced. Oil is down 50 per cent since the invasion of Ukraine, and gas prices are 80 per cent lower than their post-invasion peak. The windfall has evaporated - but the tax remains. Stifel now estimates the UK will lose £3 billion in tax receipts between 2025 and 2030 because of the EPL. In their words: 'The UK North Sea 'windfall' tax has not raised the additional revenue that was expected because there has not been a windfall to tax.' Advertisement Hide Ad Advertisement Hide Ad This is the definition of a self-defeating policy. We are taxing an industry that no longer has record profits, driving away investment and jobs — and in return, receiving less revenue, not more. And the longer-term damage goes even deeper. As Stifel point out, the UK's increasing reliance on overseas oil and gas imports is not only a threat to energy security, it also threatens our climate goals. Without the North Sea, we simply offshore our emissions to places like Norway, Qatar and the US. It might make our own numbers look cleaner — but it pushes the climate problem elsewhere, along with thousands of skilled UK jobs. Polling released last week shows overwhelming public support for a pragmatic approach. Nearly 70 per cent of UK voters would prefer domestic production over higher-emission imports. Just 27 per cent believe the windfall tax has helped reduce household bills. And three times as many people believe the tax is unfair than fair when told the true rate companies are paying. The country is not calling for ideological purity. It is calling for energy security, jobs, and real progress on climate goals - and that means working with the industries that can deliver it. Advertisement Hide Ad Advertisement Hide Ad I support the call for Keir Starmer, Rachel Reeves and Ed Miliband to come to Aberdeen. Not for a headline, but for a conversation. One that recognises the North Sea as a partner in the transition. Ed Miliband, Secretary of State for Energy Security and Net Zero. Picture:Because this isn't just a North Sea issue or something that only affects the North-east of Scotland - this is a national challenge. It's about securing affordable, reliable energy for millions of people across the UK. Oil and gas will continue to play a vital role in keeping the lights on and heating our homes for years to come, powering everything from manufacturing facilities and public transport to medical supply chains and food production. We are not asking for a handout. We're asking for a plan. One that creates the right conditions to invest, decarbonise and grow. One that protects the people and the expertise we will need every step of the way. One that doesn't make us choose between a job today and a climate solution tomorrow. Advertisement Hide Ad Advertisement Hide Ad There is still time to get this right, but we need urgent action. That starts with ending the windfall tax before the next financial year.
