More evidence is emerging that the UK Chancellor's tax grab on the North Sea is not turning out to be quite as productive a cash cow as he had hoped.
Oil and gas producers are now burdened with an eyewatering tax rate of 75% - a move which Jeremy Hunt thought would result in billions of pounds extra rolling in for the cash-strapped government.
But the recent fall in hydrocarbon prices mean the controversial windfall levy on top of regular tax will bring in much less than initially expected, restricting the chancellor's spending power in the Budget next month.
Energy Voice reports that Treasury officials now estimate tax revenues in 2023-2024 from oil and gas will be £12.7billion lower than forecast in November.
This is not good news for the chancellor, who is already under Conservative pressure to cut taxes in the Budget on March 15, a suggestion he's repeatedly pushed back against.
Mr Hunt and Prime Minister Rishi Sunak have repeatedly said their goal is to clamp down on inflationary pressures and restore order to the public finances before they can contemplate any large-scale tax cuts.
Tax receipts
The Treasury said: "Falling wholesale prices will ease pressure on energy bills, but mean that tax receipts will be significantly lower with any savings offset next year."
The chancellor has already been told by the Office for Budget Responsibility (OBR) that he has less headroom for giveaways in the Budget because of downward revisions to the country's economic growth potential linked to chronic worker shortages and weak productivity.
It emerged last month that the energy profits levy (EPL) on the country's oil and gas operators had so far raised £600million less than expected.
The initial cash haul from the tax was 24.5% less than forecast prepared by the OBR in November.
The windfall tax was first introduced in May when Rishi Sunak was chancellor, and was increased in the autumn statement after he became prime minister.
North Sea oil and gas profits are now being taxed at 75% until 2028. This is up from the regular rate of 40%, and is being used to help fund government subsidies for households and businesses.
Investment hit
The EPL had been forecast to raise a total of £40billion by 2028, but there is already evidence that the new levy is having an adverse impact on the sector.
For example, the North Sea's largest oil and gas producer is preparing to cut hundreds of jobs and shift attention outside of the UK in response to the windfall tax.
Harbour Energy has launched a review of its British business "to align with lower future activity levels" after the tax rate on operators was increased. Th firm also confirmed that it has not taken part in the UK Government's 33rd offshore licensing round.