Industry Body Responds to Autumn Budget

In a statement posted on Offshore Energies UK’s (OEUK) website, OEUK CEO David Whitehouse commented on the Autumn Budget, which was presented to parliament on October 30 by UK Chancellor of the Exchequer Rachel Reeves.

“We heard the Chancellor recognize the role of the oil and gas sector to support high quality jobs and strengthen the UK’s energy security,” Whitehouse said in the statement.

“We welcome that and the meetings and dialogue which have taken place between industry and the new government,” he added.

“While the government will increase and extend the Energy profits levy on oil and gas production to a headline rate of 78 percent and remove the associated investment allowance, the 100 percent first-year allowance and the decarbonization allowance will be retained. The Chancellor also confirmed that the EPL will fall away in March 2030,” he continued.

“However, with an increase in tax despite commodity prices at recent lows, there is no hiding that this is a difficult day for the sector,” Whitehouse went on to state.

In the statement, Whitehouse noted that “oil and gas companies, our world class supply chain, and our highly skilled people will support the energy transition” and warned that “we will not be successful without them”.

“It’s why there is a different path for this industry which can deliver the energy future we all agree on,” he said in the statement.  

“With industry and government working in partnership we can protect the North Sea as a national economic asset. It can and should serve as an engine to realize UK economic growth and climate goals,” he added.

Whitehouse noted in the statement that the group welcomes that the government will consult in early 2025 on how the oil and gas tax regime can encourage investment and respond to changes in the oil price. He said the group also notes the consultation on end use emissions for oil and gas projects.

In the statement, OEUK highlighted that 154,000 jobs are directly or indirectly related to offshore energy and revealed that 120,000 of these are directly or indirectly supported by oil and gas projects.

OEUK also noted in the statement that the UK imports around 40 percent of its energy needs and that UK energy production is at the lowest it has ever been. The UK gets three-quarters of its total energy from oil and gas, according to the statement.

Rigzone has contacted HM Treasury and the UK Department for Energy Security and Net Zero for comment on OEUK’s statement. At the time of writing, neither have responded to Rigzone’s request yet.

In her Autumn Budget speech, which was transcribed on the UK government website, Reeves said, “we committed to reform the Energy Profits Levy on oil and gas companies”. 

“I can confirm today that we will increase the rate of the levy to 38 percent, which will now expire in March 2030 … and we will remove the 29 percent investment allowance,” Reeves added.

“To ensure the oil and gas industry can protect jobs and support our energy security … we will maintain the 100 percent first year allowances and the decarbonization allowances too,” Reeves continued.

Reeves also said, “to bring new jobs to Britain and drive growth across our country … we are delivering our mission to make Britain a clean energy superpower”.

“Earlier this month, we announced a significant multi-year investment between government and business into Carbon Capture and Storage … creating 4,000 jobs across Merseyside and Teesside,” Reeves added.

“Today, I am providing funding for 11 new green hydrogen projects across England, Scotland and Wales – they will be among the first commercial scale projects anywhere in the world,” Reeves went on to state.

Reeves also said in the speech, “we will establish GB Energy … providing funding next year to set up GB Energy at its new home in Aberdeen”.

The Energy Profits Levy was introduced in May 2022 to tax the extraordinary profits of oil and gas companies operating in the UK or the UK Continental Shelf, a policy paper published on the UK government website on October 30 stated.

In July 2024 the government announced that the rate of the Energy Profits Levy would increase, that the Investment Allowance would be abolished, and that the capital allowances and Decarbonization Investment Allowance would be reviewed, with final details set out at Autumn Budget 2024, the paper added, noting that stakeholder engagement was carried out over the summer of 2024.   

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