The UK Government has missed an opportunity to unlock £50billion of investment in the North Sea by refusing to accelerate the replacement of the Energy Profits Levy, industry leaders have warned.
Offshore Energies UK (OEUK) welcomed Chancellor John Healey's decision to legislate for a new Oil and Gas Revenue Levy (OGRL), but criticised the government for delaying its introduction until 2030.
The trade body said bringing forward the replacement of the current 78% Energy Profits Levy (EPL) to 2027 could unlock more than 100 North Sea oil and gas projects, generating billions of pounds in additional tax revenues and supporting jobs across the UK.
Analysis submitted to the Treasury ahead of the Budget identified projects capable of attracting £50billion in capital investment by 2035 under a more competitive fiscal and regulatory regime.
OEUK estimates that accelerating the reforms could deliver almost £15billion in additional tax receipts for the Treasury, alongside 1.3billion barrels of additional domestic oil and gas production.
However, despite the economic benefits identified by industry, the Chancellor has opted to retain the existing windfall tax arrangements until 2030.
The trade body warned that the decision would continue to drive investment overseas at a time when Britain needs to strengthen its energy security, revitalise manufacturing and support its industrial supply chains.
David Whitehouse, chief executive of Offshore Energies UK, said: “This Budget recognised the significant contribution of the North Sea to the UK economy but missed the bigger opportunity to unlock the investment needed to secure its future contribution to jobs, growth and energy security."
“Legislating for a successor to the damaging Energy Profits Levy is welcome, but 2030 is too late. Bringing that date forward to 2027 would unlock billions of pounds of additional investment ultimately generating £15 billion pounds more tax revenue for the Exchequer.
“This is about more than oil and gas. It is about Britain’s resilience. Reindustrialisation starts at home, attracting investment into UK energy, supply chains and industrial communities. We must back North Sea oil and gas, not imports”
OEUK also warned that continued restrictions on domestic production would increase Britain's reliance on imported oil and gas, which it said can carry greenhouse gas emissions up to four times higher than domestically produced fuels.