The UK Government’s windfall tax has led to more than 90% of North Sea oil and gas producers cutting spending.
The alarming figure has come from Offshore Energies UK (OEUK).
David Whitehouse, chief executive of the trade body, told Energy Voice: “When you read about companies not investing - those are real people that are losing their jobs, that is hundreds of jobs being lost. That is our future energy security, quite frankly, being undermined.
“That’s less tax coming into the Exchequer to help support the country and to help support those in need.”
A number of producers have already announced reductions in spending due to Westminster's unpopular levy.
Chancellor Jeremy Hunt’s recent Budget hit offshore producers, as he decided to hike the existing windfall tax by another 10% to 35% - bringing the overall tax rate to an eye-watering 75%.
Levy lifespan
He has also extended the lifespan of the levy until March 2028 from the previous date at the end of 2025.
The government has said it expected the windfall cash grab to raise a total of £40billion. The total tax take from producers operators in British waters in the next six years will hit a staggering £80billion.
TotalEnergies, Apache, EnQuest and Harbour Energy are among the operators to have publicly announced spending cuts.
But Mr Whitehouse said the belt-tightening is much more widespread than that – and has written to the chancellor urging government action.
The chief executive added: “At OEUK, we have polled all of our operator members - and somewhere in excess of 90% of them have reduced capital investment and are reducing production volumes.
“We’re in a global race for energy investment. The UK doesn’t sit on its own. We’re in a global race for energy investment and it is clear that the tax changes that we have in place made the UK less attractive.
Better long-term plan
“It’s clear if we’re going to deliver the successful continued investment, a platform for the successful energy transition, then we need a better long-term plan.”
The offshore industry wants a price floor put in to reduce the percentage take of the levy when the oil and gas price falls.
Mr Whitehouse says government action is now underway on that issue.
“When prices stabilise, we want that to go away. That’s been part of our request to government and what we also want is a conversation that sets up a long-term fiscal regime that we need for investment - not only in oil and gas but across the entire renewables renewable sector.
“We’re delighted to say the Treasury have heard us on that and that kind of longer-term fiscal review will be kicking off in the course of the next few weeks.”
The trade body is also acutely aware that a general election is on the horizon, and is to have meetings with Labour leaders.
Investment uncertainty
Britain's opposition leader Keir Starmer said last month there would be no investment in new oil and gas fields in Britain under Labour.
Mr Whitehouse added: “I have a meeting coming up with Ed Miliband (the shadow energy secretary) in the next couple of weeks and we’re expecting to meet and talk to Keir Starmer.
“Yeah, I think we do have some work, but what I think we have is we a very clear story about providing energy security, about providing good jobs, about looking after our communities.
“We are looking to increase the local content of what is actually produced in the UK. I think we have a story that should resonate with any party and I’m looking forward to putting that forward.”