The North Sea oil sector is facing an unprecedented rise in taxation, now amounting to a total rate of 78%. The companies involved point to the Energy Profits Levy, recently increased to 38%. This measure extended the taxation period until 2030, raising concerns about the profitability of extraction projects. According to multiple operators, the current tax environment could speed up the withdrawal of certain stakeholders.
Impact on investment and jobs
According to Offshore Energies UK (OEUK), the increase in taxation threatens thousands of jobs and could lead to the loss of several billion pounds in public revenue. Some companies are considering reducing their operations or transferring their investments to other regions deemed more stable. Uncertainty regarding operating permits and legal disputes also hinders the execution of new North Sea projects. Several experts indicate that this situation influences the strategic planning of numerous oil groups.
NEO Energy, which owns multiple offshore assets, has already announced a slowdown in its investments in order to assess the financial impact of recent government measures. Certain industry leaders believe that the extension of the exceptional tax could discourage any future expansion in the area. The rise in operating costs, combined with uncertain regulations, puts pressure on long-term planning. Many actors fear a significant drop in domestic production, prompting questions about energy security.
Reactions and outlook
Industry sources indicate that the government aims to encourage the energy transition while maintaining oil production to ensure a stable supply. However, the new tax rules do not include incentives deemed sufficient by several industrial players to balance the increased tax burden. Some operators are considering the option of selling their assets, believing the current climate favors a medium-term withdrawal. This situation raises the prospect of heightened dependence on imports, potentially affecting costs and the stability of the domestic market.
