The UK Government's decision to increase the windfall tax has resulted in a lower tax take from the North Sea, according to official figures published yesterday.
Labour increased tax on oil and gas production to 78% last year - despite warnings from the industry that it would decimate investment and cost thousands of jobs.
New data shows that the UK's North Sea revenues have now fallen from £9.9billion in 2022/23 - when the Energy Profits Levy (EPL) was introduced - to £4.5billion in 2024-25, the year the tax was increased.
Revenue from the EPL - which is one of three taxes levied on the sector - has itself fallen from £4.2billion to £2.7billion over the same period.
The figures - which were published in the Scottish Government's Expenditure and Revenue Scotland (GERS) report - also show decommissioning expenditure rising, which will accelerate the UK Government's near £11billion bill for the removal of North Sea infrastructure.
Russell Borthwick, chief executive at Aberdeen & Grampian Chamber of Commerce, said the UK Government must now heed warnings from industry.
“These figures paint a stark picture of the two futures facing the North Sea oil and gas sector," Mr Borthwick said.
“If the UK Government continues to tax the industry at 78%, then we face an accelerated industrial decline, we will lose our world class supply chain to other parts of the word, and our oil and gas imports will continue to soar, syphoning tens of billions of pounds out of the UK economy.
“However, there is another future, one where we commit to sourcing the oil and gas we require as a nation from the North Sea, supporting jobs, public services and – crucially – creating the bridge required to a just transition while we build out renewable energy projects.
“The latter future is within our reach, but we need the UK Government to remove the Energy Profits Levy as soon as possible.”
The UK Government has pledged to invest £8.3billion of new money into Great British Energy over the course of this parliament. That was expected to be raised through the extended windfall tax on oil and gas firms.
However, Sheena McGuinness, co-head of energy and natural resources at RSM UK, has already warned that the figures might not stand up to scrutiny.
Responding to the new figures, Scottish Government Finance Secretary Shona Robison said: “Falling oil prices and a decrease in extraction present challenges going forward, but we are clear in our support for a just transition for Scotland’s valued oil and gas sector, which recognises the maturity of the North Sea basin and is in line with our climate change commitments and energy security.”