UK prepares new oil tax regime to revive UKCS competitiveness

The United Kingdom is set to replace the Energy Profits Levy with a new fiscal mechanism, caught between fairness and simplicity, as the British Continental Shelf continues to decline.

Share:

Gain full professional access to energynews.pro from 4.90$/month.
Designed for decision-makers, with no long-term commitment.

Over 30,000 articles published since 2021.
150 new market analyses every week to decode global energy trends.

Monthly Digital PRO PASS

Immediate Access
4.90$/month*

No commitment – cancel anytime, activation in 2 minutes.

*Special launch offer: 1st month at the indicated price, then 14.90 $/month, no long-term commitment.

Annual Digital PRO Pass

Full Annual Access
99$/year*

To access all of energynews.pro without any limits

*Introductory annual price for year one, automatically renewed at 149.00 $/year from the second year.

The British government is finalising a new fiscal framework to succeed the Energy Profits Levy (EPL), which remains in force until 31 March 2030. The goal is to establish a system capable of collecting a fair share of profits from national resources during periods of exceptionally high prices, while ensuring the administrative simplicity sought by operators on the UK Continental Shelf (UKCS).

Two mechanisms are under consideration: one based on revenues, favoured for its simplicity, and the other based on profits, viewed as fairer but significantly more complex to implement. Analysis by Wood Mackenzie highlights that key parameters—particularly the price thresholds and tax rates—will determine the effectiveness of the new system and its acceptability across the sector.

Operators denounce a gap between taxation and market realities

Despite Brent crude trading below the EPL trigger threshold, the tax continues to apply to all profits due to gas prices remaining above their reference level. Several companies have called for the early removal of the EPL, arguing that keeping it until 2030 undermines near-term investment and worsens fiscal imbalances in an already pressured environment.

Wood Mackenzie reports that only 18% of discovered resources on the UKCS remain undeveloped, and unit technical costs reach $35 per barrel—almost double the global average. UK projects have a median size of 27 mn barrels of oil equivalent, compared with 81 mn globally, with a pre-tax breakeven of $44 per barrel, versus $31 worldwide.

Competing regimes intensify pressure on the United Kingdom

The UK’s fiscal competitiveness lags behind that of other oil-producing jurisdictions. The US Gulf of Mexico has marginal tax rates of 31 to 35%, compared with 40% in the UK after 2030 without EPL. Norway, despite a 78% tax rate, offsets this with state control of resources and a less explored offshore basin. The UK government’s share of revenues remains at 40% for oil priced between $80 and $120 per barrel, while the global average reaches 62%, suggesting potential for adjustment without harming investment appeal.

According to Wood Mackenzie, an effective mechanism should rely on historic daily price data and align with existing fiscal components, such as the ring fence corporation tax and supplementary charge. Such a system would aim to deliver stability and predictability while preserving competitive advantage.

Tax policy decisions become vital for UK offshore survival

The analysis stresses the need for a predictable framework to counterbalance the UKCS’s structural disadvantages. Graham Kellas, senior vice president of fiscal research at Wood Mackenzie, notes that 90% of remaining UK resources are already in production or development. In this context, delaying the implementation of the new mechanism to 2030 could hinder the country’s ability to attract capital to one of the most technically demanding offshore basins in the world.

Canadian group North Atlantic will acquire ExxonMobil’s stake in Esso France, including the country’s second-largest refinery, with the ownership change expected by the end of 2025.
Ghana’s only refinery is preparing to resume operations after a prolonged shutdown caused by technical and financial issues, with a restart scheduled for October according to its management.
BP revises its annual forecast and now expects global oil demand to grow until 2030, due to slower worldwide energy efficiency gains.
The Liberian government awarded four offshore oil blocks to Nigerian company Atlas-Oranto for $12 million, strengthening the regional presence of African junior players in offshore exploration.
Oil companies are preparing for a tough 2026 with lower investments, focusing on financial discipline and cash flow redistribution at the expense of low-return projects.
North Atlantic finalises agreement to acquire ExxonMobil’s stake in Esso S.A.F., marking a decisive step in a strategic transfer in France. Completion remains subject to regulatory approvals expected this quarter.
A technical dispute between Hungarian group MOL and Croatian operator Janaf raises doubts about the Adriatic pipeline's ability to supply oil to Hungary and Slovakia.
Commercial crude inventories in the United States declined unexpectedly, as analysts had forecast an increase, amid rising imports and falling exports.
Adnan Ahmadzada, a former senior figure at SOCAR, has been placed in pre-trial detention in Baku on suspicion of large-scale embezzlement and threatening the country's economic security.
The European Commission is considering targeted tariffs on Russian oil imports still allowed in Hungary and Slovakia, in an effort to bypass existing exemptions.
Eight oil companies and Iraqi and Kurdish authorities have reached a preliminary deal to restart crude exports via the Iraq-Turkey pipeline, halted since March 2023.
Wood Mackenzie has entered into a strategic partnership with Novi Labs to integrate proprietary well-level production data and advanced lease-to-well algorithms into its Lens Lower 48 solution, covering more than 20% of global oil and gas supply.
PetroTal has temporarily halted production from four wells at the Bretana field in Peru, following technical leaks affecting pumping performance, while keeping its annual guidance unchanged.
International Petroleum Corporation repurchased 59,454 common shares between 15 and 19 September, under its ongoing share buyback programme compliant with Canadian and European regulations.
The European Commission seeks to block Russian oil flows through new bans targeting Rosneft, Gazprom Neft, foreign refineries and vessels operating outside the regulatory framework.
Caracas steps up its military posture in response to the United States’ naval deployment in the Caribbean, which the Venezuelan government accuses of having strategic designs on its oil and gas resources.
A UN report reveals that nearly 90% of road projects financed by oil never materialised, fuelling surging poverty amid extreme inflation and poor management.
Sinopec modernises its Tahe complex, increasing refining capacity and adding key units to support petrochemical production in western China.
TotalEnergies has signed four production sharing contracts for offshore blocks covering 12,700 km² off the coast of Liberia, marking a new step in the expansion of its activities in West Africa.
A new analysis estimates that existing oil fields could yield up to 1,000 billion additional barrels without major new discoveries, using proven methods supported by artificial intelligence.

Log in to read this article

You'll also have access to a selection of our best content.