Business physique Offshore Energies UK (OEUK) introduced, in an announcement despatched to Rigzone, that the group’s CEO, David Whitehouse, and “business leaders” met the UK Chancellor of the Exchequer Rachel Reeves “to put out the steps to reform of the Power Income Levy (EPL) this yr”.
“The Chancellor has requested the Monetary Secretary and officers to work with business on delivering lengthy‑time period fiscal certainty, together with readability across the ESIM [Energy Security Investment Mechanism], whereas collectively navigating the present interval of geopolitical volatility,” OEUK famous in its assertion.
“These current agreed vitality safety is nationwide safety, and a secure, predictable funding surroundings is crucial to delivering it,” it added.
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“They agreed to work collectively within the coming days to set out a path towards a fiscal regime that helps accountable home oil and gasoline manufacturing, unlocks funding, and ensures truthful return to the Treasury when costs are excessive,” it continued.
OEUK mentioned the assembly closed with a dedication to work collectively to “safeguard UK vitality, UK jobs, strengthen provide chains, and safe inexpensive, homegrown vitality for the long run”.
Within the OEUK assertion, Whitehouse mentioned, “at a time of giant world uncertainty, the UK needs to be making choices for the long run within the pursuits of vitality safety, prioritizing home manufacturing of oil and gasoline and supporting jobs”.
“This elementary want has been introduced into sharp focus by latest occasions,” he added.
Whitehouse revealed that the assembly with Reeves “adopted weeks of in-depth discussions with business”, which he mentioned passed off on the instigation of the Treasury.
“The federal government has dedicated to work with us within the coming days to discover a resolution to interchange the Power Income Levy so business could make investments in homegrown vitality,” Whitehouse mentioned.
“This can allow better vitality safety, tax revenues and progress for the UK financial system,” he added.
“On the idea of this proposed change our members recognized extra funding within the UK Continental Shelf (UKCS) that would start subsequent yr,” Whitehouse continued.
“And that is simply step one. The business is able to make investments as much as GBP 50 billion [$66.6 billion] in new exercise by 2050 with a functioning regulatory regime,” he famous.
Whitehouse went on to state that OEUK welcomed that the Chancellor “acknowledged the necessity for the EPL to finish and appreciated her time to debate these points in individual, throughout which North Sea operators reaffirmed their unwavering dedication to lowering our reliance on imports and bolstering UK vitality, financial and nationwide safety at a time of geopolitical disaster”.
Rigzone requested the UK Division of Power Safety and Web Zero (DESNZ) and HM Treasury (HMT) for touch upon OEUK’s assertion. In response, HMT despatched Rigzone a briefing on the assembly.
In that briefing, HMT confirmed that Reeves met with representatives from the oil and gasoline business at Quantity 11 Downing Avenue and mentioned the assembly was “optimistic, with the Chancellor and business leaders agreeing on their shared agenda of supporting jobs, funding, and progress”.
The briefing mentioned the Chancellor “opened the assembly stating it was the federal government’s dedication to behave in Britain’s nationwide curiosity in response to the battle within the Center East”.
“She reaffirmed her dedication to backing Britain’s oil and gasoline business, recognizing its pivotal function in supporting progress and jobs in communities, particularly these in Scotland, within the transition to a future of unpolluted vitality,” the briefing added.
The briefing said that home oil and gasoline will proceed to have a task within the vitality combine for many years to return.
“[Reeves] advised attendees that she had instructed the Monetary Secretary and officers … to work with the business on two fast priorities,” the briefing famous.
“First, offering long-term monetary certainty for the sector. She acknowledged that the forecast triggering of the ESIM in 2027 will likely be welcome and emphasised her keenness to offer certainty to the sector on that entrance, however she highlighted that geopolitical occasions create a extra unsure context for coverage choices,” it added.
“Second, working collaboratively with the oil and gasoline business to navigate this unsure interval over the approaching months,” the briefing continued.
Within the briefing, a authorities supply said, “the Chancellor was clear with business that she desires the Power Income Levy to return to an finish”.
“She has made that promise and he or she stands by it. Certainly, it was a dedication she needed to make this week. However the disaster within the Center East has had real-time penalties on oil and gasoline costs and it’s proper that we reply to this,” the supply added.
The briefing revealed that the complete record of business attendees on the assembly comprised OEUK, Adura, Neo Subsequent, Harbour Power, Ithaca Power, Serica, BP, Perenco, EnQuest, TotalEnergies, and the North Sea Transition Authority (NSTA).
HMT’s briefing highlighted that, at Price range 2025, the federal government introduced that the brand new Oil and Fuel Value Mechanism (OGPM) will substitute the Power Income Levy and apply in instances of excessive costs.
“The mechanism will likely be a revenue-based tax with a fee of 35 % and thresholds of $90/barrel (oil) and 90p/therm (gasoline) for Monetary Yr 2026/27 (up to date yearly to account for inflation),” the briefing famous.
“The OGPM will come into impact as soon as the EPL ends – both on 1 April 2030 or earlier if the ESIM triggers,” it added.
DESNZ has not responded to Rigzone on the time of writing.
To contact the creator, electronic mail andreas.exarheas@rigzone.com
