Page 4 - EurOil Week 10 2023

EurOil COMMENTARY EurOil

OEUK pushes for better

North Sea policies

OEUK warns that the windfall tax must be revised to account for

when oil and gas prices fall.

UK UK North Sea oil and gas trade body Offshore hard, large and small, not just those who make
Energies UK (OEUK) has called on the govern- headlines.”
WHAT: ment to limit its windfall tax on industry profits, EnQuest recently deferred drilling at its
The head of OEUK has set provide greater incentives for decarbonisation Kraken oilfield in response to the tax, while
out three key proposals investments and ensure greater long-term fiscal US-owned Apache scrapped a drilling contract,
for inclusion in the UK stability in its spring budget, due to be released saying that the levy had made the region “less
spring budget. next week. competitive.” And only last week, UK operator
These proposals are “time critical” for the Ithaca Energy said that the tax could impact the
WHY: industry, to ensure it can capitalise on a planned timeframe for the development of the Cambo
OEUK wants to see £200bn ($241bn) of investment opportunities oilfield – the UK’s largest.
the windfall tax over the next decade, OEUK CEO David White- In the new letter, Whiehouse said that “a
on profits revised, house told UK Chancellor Jeremy Hunt in a let- number of billion-pound M&A deals” have gone
greater incentives ter. First and foremost, he warned that banks overseas due to the tax, adding it had already
for decarbonisation were now lending the sector half as much as a “eroded millions” from the values of North Sea
investments and result of a windfall tax on profits introduced last firms.
assurances of long-term year. This has heavily affected final investment “Any delay to delivery to a later point in the
fiscal stability. decisions (FIDs) that depend on reserves-based legislative calendar risks irreversible damage
lending facilities, he said. to the sector’s long-term objective of delivering
WHAT NEXT: OEUK warned in late February that oil and clean energy security and accelerating an energy
The budget is due to be gas companies were scaling back their North Sea transition to net-zero,” Whitehouse said.
unveiled on March 15. operations in response to the levy, while focus-
ing more on investments elsewhere. White- A trigger price
house warned in a statement back then that the OEUK wants to see a “trigger price” introduced
“super tax [was] hitting all offshore companies in the budget that would mean that the windfall

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