A more competitive fiscal regime for the North Sea could generate an additional £13.4billion for the UK Treasury over the next decade – enough to eliminate fuel poverty across the country, according to Offshore Energies UK (OEUK).
Giving evidence to the House of Commons Energy Security and Net Zero Committee today, OEUK chief executive David Whitehouse is expected to argue that accelerating the introduction of the Treasury’s proposed Oil and Gas Price Mechanism (OGPM) would unlock billions in investment, increase domestic energy production and strengthen public finances.
The industry body says replacing the Energy Profits Levy with the OGPM from April 2027, rather than waiting until its planned introduction in 2030, would generate an additional £2.8billion in direct taxes from the sector over the next decade. A further £10.6 billion would be raised through payroll taxes from the workforce, bringing the total additional revenue to £13.4billion.
OEUK argues that the current windfall tax is discouraging investment in the UK Continental Shelf, making projects uneconomic and accelerating production decline.
Analysis presented to MPs will claim that a more competitive tax environment, combined with support for developments such as Rosebank and Jackdaw, could deliver an additional 1.1 billion barrels of oil and gas production by 2035, meeting around half of the UK's forecast demand during that period.
The industry body also estimates the measures would contribute more than £60billion to the UK economy over the next decade and help slow the projected 30-40% decline in domestic production.
OEUK warns that without policy changes, the UK will become increasingly reliant on imported liquefied natural gas (LNG), particularly from the United States and Qatar. Its analysis suggests LNG could supply up to half of UK gas demand within a decade.
By comparison, a stronger domestic production sector would limit LNG dependency to around 4% by 2030 and 6% by 2035, according to the organisation.
Ahead of the committee session, Mr Whitehouse said: “Domestic oil and gas production doesn’t just supply energy - it gives the Chancellor choices. It generates tax revenues, supports jobs, and strengthens the economy. Those are the levers government can use to support households - including those in fuel poverty.”
He added: “Our analysis shows that a stable North Sea tax regime coupled with supportive policy could generate enough additional tax revenue to eliminate fuel poverty altogether.”
“It is estimated that approximately 50% of the UK energy demand to 2050 will be met by oil and gas. The choice is whether we produce it ourselves with all the benefits for UK jobs, economic value, taxes, or rely on imports with none of those benefits.”
Mr Whitehouse also said: “Accelerated production decline in the UK is a policy choice not a geological inevitability. It leaves us poorer, less able to support vulnerable communities, more exposed to geopolitical risk, and reduces energy security for the UK and our European partners.”