UK Likely To Unlock £10 Billion Worth Of North Sea Oil & Gas With Encouraging Fiscal Regime, Woodmac Finds

Wedoany.com Report-Oct 26, Given the rising focus on energy security, Wood Mackenzie, an energy intelligence group, has pointed out that the United Kingdom (UK) could get its hands on an additional £10 billion of North Sea oil and natural gas value from existing assets if it puts the right set of fiscal and regulatory policies in place.

With the ongoing energy trilemma at the forefront, as it requires measures to be taken to pursue energy security, affordability, and sustainability with equal vigor, many countries around the globe, including Britain, have taken steps to diversify and shore up their supplies while advancing their energy transition journey.

The United Kingdom’s trade body for the offshore energy industry, Offshore Energies UK (OEUK), recently noted the progress the UK made in reaching its greenhouse gas (GHG) emissions reduction goals while emphasizing the need to secure a continuing supply of homegrown energy and sustaining the supply chain, perceived as vital to bringing wind or hydrogen energy ashore as Britain transitions to a greater reliance on clean renewable energy.

While the Autumn Budget statement is expected on October 30, the government has already announced it would increase the EPL rate by 3% to 38%, taking the UK’s marginal tax rate to 78%, and revealed its intention to remove the EPL’s investment allowance, reduce its capital allowance, and extend its sunset clause from 2029 to March 31, 2030.

David Whitehouse, OEUK’s CEO, stated: “The North Sea is a strategic national asset and must be treated as such. Our homegrown offshore energy sector has powered the UK for the past 60 years, and the sector’s firms and skilled people are critical to our energy future as drivers of economic growth.

“We welcome steps to accelerate the deployment of renewable energy, and the recognition that we will use oil and gas for decades to come. Windfall taxes extended on oil and gas producers when no windfall exists deter the very investment that we need across our energy transition.“

OEUK, which pinpointed the decarbonization of oil and gas production as the best way forward to power the nation’s homes and businesses with low-carbon and zero-emission energy, also warned that government revenue from the North Sea could fall by as much as £12 billion by 2029 if all the proposals under discussion at the time where implemented to raise total taxes on profits to 78% and remove tax allowances on new investment.

“While we use oil and gas, we must surely prioritise investment in our homegrown production, value in our economy, and our jobs. {…} The government has heard from people across the sector, and now decisions will be made. On Wednesday, the Autumn Statement will be a marker. We are in a global race for energy investment. Let us choose the path that encourages and attracts it, to build on our national strengths, so the whole of the UK can win.”