The UK government’s decision to keep the energy profits levy (EPL) in place has drawn strong criticism from Offshore Energies UK (OEUK), which warns the policy is accelerating the decline of the country’s offshore sector. The levy, introduced in May 2022 during the global price surge, lifts the total tax burden on North Sea producers to 78%, a level OEUK says is suppressing essential investment.
Despite Office of National Statistics data showing profits in the UK upstream sector have slipped into negative territory, the Autumn Budget maintained the EPL beyond 2026, rejecting calls from industry to adopt a more competitive long-term mechanism. OEUK argues this decision jeopardises about £50 billion (roughly $66 billion) in potential investments, as companies redirect capital to more profitable regions.
Chief Executive David Whitehouse emphasised that the UK is now losing around 1,000 jobs each month, with greater reliance on imported energy and widening strain across domestic supply chains. OEUK plans to convene its 450 member firms—spanning oil and gas, wind, hydrogen, and carbon capture—for urgent talks and is pressing for an immediate meeting with the Chancellor.
The organisation notes the government still expects 75% of national energy demand to be met by oil and gas for decades, requiring 10–15 billion barrels by 2050. OEUK believes half of this could be produced domestically with tax reform and pragmatic licensing; without such changes, it warns that imports, job losses, and project cancellations will intensify.
Sector concerns are reinforced by the absence of new exploration wells in 2025 and a 40% drop in domestic output over the past five years, with production expected to halve again by 2030. Global Underwater Hub echoed the frustration but welcomed plans for new subsea tiebacks, which it sees as a boost to the UK subsea supply chain.
OEUK maintains that the current downturn stems from policy choices rather than geology. Its proposed pathway highlights £200 billion in potential investment across offshore wind, CCS, hydrogen, and hydrocarbons, and £150 billion in added value tied to the responsible production of an additional 3 billion barrels of domestic resources. Some operators, including Serica, are reassessing future spending priorities based on the clarified fiscal regime.
