popular articles

Profit reforms: North Sea investments under threat

The UK government's planned changes to the Enterprise Profit Levy (EPL) could put the brakes on investment in the North Sea oil and gas sector, according to a study by Wood Mackenzie.
Réformes EPL impacts sur l'investissement

Please share:

The UK government is planning major adjustments to the Extraordinary Profits Levy (EPL) for oil and gas companies operating in the North Sea.
These changes could have a significant impact on investment in the upstream energy sector.
A recent study by Wood Mackenzie highlights the potential impact of these changes on the industry.

Proposed modifications

The draft reforms propose to increase the EPL rate from 35% to 38%, extend the sunset clause to March 31, 2030, and repeal the 29% tax relief for investments.
In addition, capital allowances would be reduced, although the specific details of these changes are not yet specified.
These adjustments are intended to increase tax revenues, with an estimated £1.2 billion per year, or £6 billion over the life of the parliament. This reform could have a significant negative impact on the investment climate.

Impact on Investment

Graham Kellas, Senior Vice President of Global Tax Research at Wood Mackenzie, points out that these changes could lead to reduced investment in the upstream sector.
Reduced tax incentives and uncertainty surrounding capital depreciation adjustments could dampen investor commitment, leading to a possible premature reduction in production.
This situation could adversely affect the future development of the North Sea oil and gas sector.

Reactions and implications

The Wood Mackenzie study also points out that the extension of the sunset clause until 2030 is surprising.
The Labour government had previously announced that it would maintain the EPL as it stands until the end of this parliament in 2029.
This extension changes the outlook for investors, who may now see the EPL as a permanent component of the tax system.
James Reid, Senior Analyst at Wood Mackenzie, notes that this continuing uncertainty could alter long-term investment forecasts and negatively influence the financial planning of companies in the sector.

Consequences for Industry

The proposed changes highlight a gap between the investment and production phases.
The continued extension of the EPL end date creates greater uncertainty for investors, who may adopt a more conservative approach.
This dynamic could slow the pace of development of current projects and reduce the prospects for future expansion in the North Sea energy sector.

Future prospects

Adjustments to the profit levy introduce significant challenges for the North Sea oil and gas industry. The consequences of these reforms could include reduced investment and altered long-term development strategies.
The government’s ability to balance tax revenues with investment support will be crucial to the future viability of the sector.

Register free of charge for uninterrupted access.

Publicite

Recently published in

The United Kingdom achieved a historic record of 58% low-carbon electricity in 2024, marking a key step in its energy transition and sending a strong signal to European political and economic actors.
India reaches an installed energy capacity of 457 GW in 2023, doubling in a decade. This growth highlights the delicate balance between energy transition and the need to meet rising electricity demand.
India reaches an installed energy capacity of 457 GW in 2023, doubling in a decade. This growth highlights the delicate balance between energy transition and the need to meet rising electricity demand.
In 2024, renewable energy in Portugal accounted for 71% of electricity consumption, a record driven by significant growth in photovoltaic and hydropower production, according to the national grid operator REN.
In 2024, renewable energy in Portugal accounted for 71% of electricity consumption, a record driven by significant growth in photovoltaic and hydropower production, according to the national grid operator REN.
Iran will meet European diplomats in Geneva on January 13 amidst controversy over its 60% uranium enrichment, according to the International Atomic Energy Agency (IAEA).
Iran will meet European diplomats in Geneva on January 13 amidst controversy over its 60% uranium enrichment, according to the International Atomic Energy Agency (IAEA).
A massive power outage plunged Puerto Rico into darkness on New Year's Eve, affecting more than a million households. The structural challenges of the energy grid reveal significant shortcomings.
A suspected sabotage of the EstLink 2 cable connecting Finland to Estonia results in travel bans for seven sailors. A thorough investigation highlights significant geopolitical implications.
A suspected sabotage of the EstLink 2 cable connecting Finland to Estonia results in travel bans for seven sailors. A thorough investigation highlights significant geopolitical implications.
ADNOC forecasts 1.744 million barrels per day for its Murban crude exports in December 2025, a slight drop compared to November. March 2025 will experience a significant reduction of 70,000 barrels per day.
ADNOC forecasts 1.744 million barrels per day for its Murban crude exports in December 2025, a slight drop compared to November. March 2025 will experience a significant reduction of 70,000 barrels per day.
Despite the end of the tariff shield on February 1, French households will benefit from a 14% reduction in their electricity bills. This measure is tied to the absence of adoption of the 2025 budget, which nevertheless has side effects.
Despite the end of the tariff shield on February 1, French households will benefit from a 14% reduction in their electricity bills. This measure is tied to the absence of adoption of the 2025 budget, which nevertheless has side effects.
EDF and its representative unions finalize a salary agreement for 2025. The deal includes a global increase of 2.7%, while negotiations remain open in several gas sector companies.
The Environmental Authority calls for increased efforts to ensure France meets European climate goals, emphasizing a significant reduction in energy consumption to align with the requirements of the "Fit for 55" plan.
The Environmental Authority calls for increased efforts to ensure France meets European climate goals, emphasizing a significant reduction in energy consumption to align with the requirements of the "Fit for 55" plan.
Re-elected with 55% of the votes, Maia Sandu embodies the pro-European choice of Moldovans. This decision, however, faces external interference and a growing energy crisis.
Re-elected with 55% of the votes, Maia Sandu embodies the pro-European choice of Moldovans. This decision, however, faces external interference and a growing energy crisis.
The new American plan aims for a 66% reduction in emissions by 2035, focusing on local policies and investments in clean energy, with significant implications for markets and regulation.
The new American plan aims for a 66% reduction in emissions by 2035, focusing on local policies and investments in clean energy, with significant implications for markets and regulation.
The Inter-American Court of Human Rights has condemned Colombia for violating U'wa rights by approving seven energy projects impacting 370 km of their protected ancestral lands.
Green electricity outages in Germany jeopardize Olaf Scholz’s energy policy. Amid internal criticism and European tensions, the German model is under scrutiny ahead of the legislative elections.
Green electricity outages in Germany jeopardize Olaf Scholz’s energy policy. Amid internal criticism and European tensions, the German model is under scrutiny ahead of the legislative elections.
Spanish lawmakers rejected the continuation of an exceptional tax on energy companies, highlighting significant parliamentary disagreement and raising concerns about the future of investments tied to the country's energy transition.
Spanish lawmakers rejected the continuation of an exceptional tax on energy companies, highlighting significant parliamentary disagreement and raising concerns about the future of investments tied to the country's energy transition.
Starting July 2025, a European label will allow passengers to compare CO2 emissions from flights, aiming to promote less polluting options.
Starting July 2025, a European label will allow passengers to compare CO2 emissions from flights, aiming to promote less polluting options.
The UK electricity grid operator, National Grid, announces an ambitious £35 billion plan to double electricity transmission capacity by 2031, in alignment with the government's environmental goals.
Nigeria approves Shell's $2.4 billion sale of 30% onshore assets
Nigeria approves Shell's $2.4 billion sale of 30% onshore assets
The Department of Energy grants a conditional $15 billion loan to PG&E to modernize California's infrastructure. This project is part of a larger effort to transform regional energy policy.
The Department of Energy grants a conditional $15 billion loan to PG&E to modernize California's infrastructure. This project is part of a larger effort to transform regional energy policy.
Germany’s energy policy, marked by the nuclear phase-out, has driven electricity prices up in Sweden, affecting households and businesses. Stockholm accuses Berlin of neglecting regional impacts and suspends a key interconnection project.
Germany’s energy policy, marked by the nuclear phase-out, has driven electricity prices up in Sweden, affecting households and businesses. Stockholm accuses Berlin of neglecting regional impacts and suspends a key interconnection project.
The Court of Audit reveals €200 billion in investment needs to modernize French electrical grids by 2040, urging a balance between shareholder and consumer financial efforts.
Donald Trump's proposal to impose a 25% tariff on all imports from Canada and Mexico risks disrupting supply chains and increasing costs for American businesses and consumers.
Donald Trump's proposal to impose a 25% tariff on all imports from Canada and Mexico risks disrupting supply chains and increasing costs for American businesses and consumers.
Reforms aimed at accelerating energy permits have been excluded from the U.S. budget bill, postponing discussions to a Republican-led Congress that plans more ambitious changes.
Reforms aimed at accelerating energy permits have been excluded from the U.S. budget bill, postponing discussions to a Republican-led Congress that plans more ambitious changes.
The U.S. Supreme Court reviews the fuel industry’s challenge against California’s exclusive right to impose electric vehicle sales targets, a key issue for national emission standards.
The U.S. Supreme Court reviews the fuel industry’s challenge against California’s exclusive right to impose electric vehicle sales targets, a key issue for national emission standards.

Advertising