The windfall tax imposed to help UK consumers with the cost of energy could push up bills further in the future, according to leading international lawyers.
Law firm CMS said a "clear and settled tax regime" was vital for companies making long-term investment decisions.
Its Oil and Gas Disputes Survey for 2021-2022 - compiled by interviewing 50 legal managers and in-house counsel for the energy industry - highlighted fiscal stability as "a significant area of concern".
And it warns that energy security and affordability could become an issue.
Investment impact
"Important investment decisions are typically made many years in advance," the report says.
"A clear and settled tax regime is therefore vital to the industry. This has, however, become a significant area of concern as we witness increasing pressure on governments to levy additional burdens on an industry seen to be continuing to make significant profits.
"While many would argue that it’s right for governments to provide public support to help offset rising energy costs, windfall taxes such as the Energy Profits Levy imposed by Westminster in relation to UKCS activities impact on energy investment and can further contribute towards security and affordability issues."
North Sea is world’s ‘highest risk’ area
The report also revealed that the UK is viewed as the most likely place for legal disputes to break out, ranked top by 31% of respondents, followed by Africa and the Middle East (both 18%) and North America (13%).
Respondents said ageing oil and gas installations in the mature basin are contributing, “putting a strain on joint venture relationships” as different partner firms having differing commercial interests.
There also remains a high level of concern about the potential for climate activism and net zero protests to lead to court actions.
More than half of respondents said the UKCS was the geographical region where we would most likely see climate change and net zero court actions instigated by shareholders, investors or activists.
The report adds: "As profit margins become tighter in the region, and public pressure in relation to the ‘net zero’ agenda increases, there are concerns that this will drive an increase in the number of disputes."