Dec 3, 2025
UK Windfall Tax Threatens $20 Billion Investment in North Sea Oil.
The UK government's choice to maintain the windfall tax on operators in the North Sea may eliminate up to $20 billion (£15 billion) in potential investments in offshore oil and gas production in Britain, according to a Wood Mackenzie estimate mentioned by the Financial Times.
Last week, the government confirmed the continuation of the windfall tax on operators in its Budget, negatively impacting the industry.
Maintaining the Energy Profits Levy (EPL), the official name for the windfall tax first implemented by a Conservative government during the 2022 energy crisis, is projected to completely eliminate all non-essential investments in the UK sector, as it would struggle to compete with more favorable tax environments, according to WoodMac.
The UK has one of the highest tax rates among major producing regions globally. In conjunction with the windfall tax, which the government retained despite industry calls for change, operators are facing a significant overall tax rate of 78%.
This situation has led many companies to pause investments in the UK and reduce their workforce.
Harbour Energy, a prominent independent producer, recently announced plans to cut another 100 jobs, adding to the 600 positions already eliminated since 2023.
The industry criticized the government's decision, contending that the windfall tax will ultimately jeopardize the offshore oil and gas sector and undermine Britain’s energy security.
David Whitehouse, Chief Executive of Offshore Energies UK, stated, “The future of North Sea energy relies on investment, which won't materialize without urgent reforms to the windfall tax.”
He added, “The government has rejected £50 billion of investment for the UK and the opportunity to safeguard jobs and industries essential for the country. Instead, they have opted for a route that will lead to the loss of 1,000 jobs monthly, increased energy imports, and a ripple effect across supply chains and industrial areas.”
The Aberdeen & Grampian Chamber of Commerce expressed that it’s “Lights out for North Sea oil and gas as Chancellor retains windfall tax.”
Russell Borthwick, the Chamber’s chief executive, remarked that instead of considering industry advice, “the UK Government has chosen a rapid end to North Sea production and aims to tax the industry into oblivion within five years. Thousands of jobs will be lost directly due to this government's inaction.”
Last week, the government confirmed the continuation of the windfall tax on operators in its Budget, negatively impacting the industry.
Maintaining the Energy Profits Levy (EPL), the official name for the windfall tax first implemented by a Conservative government during the 2022 energy crisis, is projected to completely eliminate all non-essential investments in the UK sector, as it would struggle to compete with more favorable tax environments, according to WoodMac.
The UK has one of the highest tax rates among major producing regions globally. In conjunction with the windfall tax, which the government retained despite industry calls for change, operators are facing a significant overall tax rate of 78%.
This situation has led many companies to pause investments in the UK and reduce their workforce.
Harbour Energy, a prominent independent producer, recently announced plans to cut another 100 jobs, adding to the 600 positions already eliminated since 2023.
The industry criticized the government's decision, contending that the windfall tax will ultimately jeopardize the offshore oil and gas sector and undermine Britain’s energy security.
David Whitehouse, Chief Executive of Offshore Energies UK, stated, “The future of North Sea energy relies on investment, which won't materialize without urgent reforms to the windfall tax.”
He added, “The government has rejected £50 billion of investment for the UK and the opportunity to safeguard jobs and industries essential for the country. Instead, they have opted for a route that will lead to the loss of 1,000 jobs monthly, increased energy imports, and a ripple effect across supply chains and industrial areas.”
The Aberdeen & Grampian Chamber of Commerce expressed that it’s “Lights out for North Sea oil and gas as Chancellor retains windfall tax.”
Russell Borthwick, the Chamber’s chief executive, remarked that instead of considering industry advice, “the UK Government has chosen a rapid end to North Sea production and aims to tax the industry into oblivion within five years. Thousands of jobs will be lost directly due to this government's inaction.”