The incoming UK Prime Minister is expected to announce measures supporting the North Sea oil and gas sector from the outset of their premiership. Central to these discussions is the potential reform or scrapping of the Energy Profits Levy (EPL), a windfall tax introduced in response to price spikes following Russia's invasion of Ukraine. The EPL currently has a headline rate of 78%, applied regardless of oil and gas price fluctuations.
The industry argues that the EPL has made the North Sea one of the least attractive regions globally for investors, citing a significant decline in investment since its implementation. The levy is scheduled to be replaced in 2030 by a different windfall tax that operators prefer, as it is only triggered during periods of high prices and adjusts downwards when prices fall.
While political debate has focused on specific projects like Jackdaw and Rosebank, and new exploration licenses, the industry's primary request for the new prime minister is a focus on the EPL. This policy adjustment is also anticipated to face less opposition from environmental groups compared to other potential support measures.
Such a move could align with a broader mission of reindustrialization by encouraging investment and securing jobs. However, observers note that addressing the EPL might be a less politically prominent action compared to other options. The Prime Minister's decision on this matter could define whether their approach prioritizes headline-grabbing initiatives or genuine economic stimulation.
Environmental groups have previously protested against new fossil fuel projects, with demonstrations against the Rosebank oil field development occurring outside the Court of Session building.
