Trade physique Offshore Energies UK (OEUK) stated the UK authorities Funds “delivers [a] bitter blow to [the] UK’s power employees and trade”, in an announcement despatched to Rigzone on Wednesday.
In that assertion, OEUK “condemned the federal government’s determination in at present’s [Wednesday] Funds to reject substitute of the Power Earnings Levy (EPL) in 2026”, dubbing it “a transfer that can price tens of hundreds of jobs, cripple funding, and undermine Scotland and the UK’s power safety”.
OEUK revealed within the assertion that it’s going to meet its 450 member firms “for pressing talks”. The trade physique famous that additionally it is in search of a direct assembly with UK Chancellor of the Exchequer Rachel Reeves “to discover each possibility to reverse this coverage and forestall additional financial and industrial harm”.
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OEUK Chief Government David Whitehouse stated within the assertion, “at present, the federal government turned down GBP 50 billion [$66 billion] of funding for the UK and the prospect to guard the roles and industries that maintain this nation operating”.
“As a substitute, they’ve chosen a path that can see 1,000 jobs proceed to be misplaced each month, extra power imports, and a contagion throughout provide chains and our industrial heartlands,” he added.
“This isn’t over. We are going to maintain urgent for change – this trade’s individuals, their communities, and the worth of this strategic nationwide asset are too vital to dismiss. The federal government was warned of the risks of inaction – they have to now personal the results and rethink,” he continued.
Whitehouse warned within the assertion that the way forward for North Sea power is determined by funding, which he stated received’t come with out pressing reform of the windfall tax.
“If the levy stays in place past 2026, tasks will stall and jobs will vanish, regardless of how pragmatic licensing coverage turns into. Fixing this outdated tax is the important thing to unlocking billions in funding throughout the UK’s whole power combine,” he added.
“Ready 4 years for reform of this tax is too late. The North Sea continues to be one of many least aggressive locations for our trade on the earth,” he continued.
“We put ahead a realistic plan: a reformed, everlasting windfall tax in change for billions in UK funding, extra tax paid, and jobs sustained. Authorities stated no,” Whitehouse went on to state.
Within the assertion, OEUK highlighted that the federal government acknowledges the UK wants oil and gasoline for many years to return. It famous that, as renewables roll out, 75 % of the UK’s power nonetheless comes from oil and gasoline and that 10-15 billion barrels are required by 2050.
“OEUK has proven how half of this quantity may very well be produced at house with tax reform in tandem with a realistic method to licensing,” the trade physique identified within the assertion.
“In any other case imports will proceed to rise as jobs, tasks, and funding transfer abroad,” it added.
OEUK stated within the assertion that it’s reviewing “each the total element of the Funds and the federal government’s newest steerage on licensing, and the Way forward for the North Sea session end result, introduced at present”, including that OEUK “has constantly advocated for a realistic end result on licensing”.
The trade physique identified that no new exploration wells have been drilled in 2025 and warned that home oil and gasoline manufacturing has fallen by 40 % within the final 5 years “and is on target to halve once more by 2030”.
“That is an accelerated decline pushed by authorities coverage, not geology,” OEUK stated.
Rigzone has contacted the UK Division for Power Safety and Web Zero (DESNZ) and HM Treasury (HMT) for touch upon OEUK’s assertion. On the time of writing, neither have responded to Rigzone.
A Funds 2025 coverage paper posted on the UK authorities web site on November 26 said that the federal government “is offering long-term fiscal and regulatory certainty to the oil and gasoline sector and its traders by confirming the small print of a everlasting mechanism to answer oil and gasoline value shocks when the Power Earnings Levy (EPL) ends”.
“The federal government has additionally printed the North Sea Future Plan. The Plan units out the motion the federal government is taking to help ongoing funding and alternatives in oil and gasoline, guaranteeing a good, orderly and affluent transition within the North Sea,” it added.
“The federal government is delivering on its commitments to stop issuing new oil and gasoline licenses to discover new fields, whereas guaranteeing current fields will be managed for his or her full lifespan, together with by introducing Transitional Power Certificates. The Plan establishes a brand new North Sea Jobs Service, providing tailor-made finish‑to‑finish help for the present workforce,” it continued.
The Funds paper went on to state {that a} new Oil and Gasoline Worth Mechanism (OGPM) will act as a windfall tax “to ship a good return to the nation when oil and gasoline costs are unusually excessive”.
“The mechanism shall be revenue-based and apply an extra tax charge of 35 % above value thresholds of $90/barrel for oil and 90p/therm for gasoline. Present value forecasts recommend that oil and gasoline costs are anticipated to be near triggering the Power Safety Funding Mechanism (ESIM) value ground throughout the subsequent few years,” it famous.
“If common oil and gasoline costs fall beneath the ESIM thresholds, the Power Earnings Levy (EPL) will finish instantly and the brand new OGPM will come into impact, returning the tax charge to the 40 % headline charge within the everlasting regime, with the OGPM solely making use of when costs are unusually excessive,” it said.
If the ESIM shouldn’t be triggered, the EPL will finish by March 2030 and shall be changed by the OGPM, in keeping with the paper.
“To supply certainty and guarantee readiness ought to costs fall and the EPL finish earlier, the federal government intends to legislate for the OGPM within the subsequent Finance Invoice (2026-27),” the paper famous.
“The federal government will begin engagement instantly after the Funds on the draft laws and implementation, to make sure the regime is able to function if required, and to contemplate the potential impacts of an early finish to the EPL because of falling costs,” it added.
“These measures will help progress, oil and gasoline employees, provide chains and communities, recognizing the vital function that oil and gasoline will proceed to play within the UK’s power combine for many years to return,” it continued.
To contact the writer, e-mail andreas.exarheas@rigzone.com
