Treasury documents released last week could spell good news for North Sea decommissioning and CCUS investment, but tax uncertainty remains.
Energy Profits Levy (EPL)
The UK government is planning for the introduction of a new tax mechanism for North Sea oil and gas operators following the scheduled end of the windfall tax in 2028
Without the government’s new Energy Profits Levy, Shell said it wouldn’t have had to pay corporate tax in the UK.
While support for new North Sea oil and gas has been welcomed, the energy sector has called for a drop in windfall taxes and greater incentives for low-carbon investment ahead of the Chancellor’s impending budget.
Aberdeen and Grampian Chamber of Commerce has called for a new body independent of government to be set up to oversee UK energy security and the transition to net zero.
United Oil & Gas (LON: UOG) has terminated an asset purchase agreement with Quattro Energy for the conditional sale of a North Sea licence.
The “reactionary” windfall tax is harming net zero, deals and production, warns Viaro Energy CEO Francesco Mazzagatti.
The most recent Decommissioning Cost and Performance Report published by the North Sea Transition Authority (“NSTA”) on 9 August 2023 showed that the total cost estimate for decommissioning remaining oil and gas infrastructure on the UK Continental Shelf ("UKCS") is over £40 billion.
Serica Energy is in discussions over several deals in Norway and Europe, as CEO Mitch Flegg lamented a “lack of opportunity” in the North Sea as a result of the windfall tax.
This year has seen the UK’s political parties go toe to toe in the debate surrounding energy transition, however, OEUK’s Jenny Stanning asks are party views “really that different?”.
Around £100 billion of North Sea projects are being held up over political uncertainty – while UK oil production hit its lowest in nearly 30 years.
"The UK's oil and gas sector faces significant challenges and loss of competitiveness due to uncertainty following the adverse changes to the fiscal regime,” said EnQuest CEO Amjad Bseisu.
Harbour Energy (LON: HBR) chief executive Linda Cook told investors that her firm will lobby government to include carbon capture and storage (CCS) spending in windfall tax allowances.
Shares in Harbour Energy (LON: HBR) dipped this morning as the North Sea’s largest producer reported an $8m loss after tax.
Ithaca says its production will drop next year as the EPL causes project deferrals or cancellations for 2023 and 2024.
Business leaders urge change in ScotGov policy as oil and gas helps cut deficit in GERS figures.
The UK government is launching a review of its oil and gas fiscal regime and has launched a call for evidence.
Apache has brought forward plans to end Forties, a foundation of North Sea production since the 70s, by 11 years.
Having made 7,500 cuts across the globe in 2020, figures published by the oil giant show UK numbers have nearly recovered to pre-pandemic levels.
The regulator is not expected to use its ultimate sanctioning powers here - even if licensing rules have been breached.
While a ‘price floor’ in the North Sea windfall tax has been welcomed, north-east energy experts questioned whether it's enough to spur new investment.
There are claims that a lack of change to the renewables windfall tax is undermining the UK’s claim to be a leader in green energy.
A group of North Sea firms is urging the UK Government to drop the curtain on the windfall tax ahead of the current schedule.
While it’s not a panacea - and may never actually kick into force - the windfall tax price floor could help with financing the $5bn of North Sea projects awaiting FID.
A welcomed move from industry, but projections show the price floor is unlikely to kick in before the tax is due to end in March 2028.