OEUK to Continue to Make Case for Stable Tax Regime

OEUK to Continue to Make Case for Stable Tax Regime
OEUK's latest move comes as the UK government published its draft legislation for the Energy (Oil and Gas) Profits Levy Bill.

Industry body Offshore Energies UK (OEUK) has said it will continue to make the case for a stable tax regime which encourages companies to invest in UK oil and gas and avoids increasing the country’s reliance on imported energy.

OEUK’s latest move comes as the UK government published its draft legislation for the Energy (Oil and Gas) Profits Levy Bill. In a statement posted on its website, OEUK noted that offshore oil and gas operators are already expected to pay $9.5 billion (GBP 7.8 billion) in production taxes alone in 2022. While the Treasury expects the levy to raise an additional $6 billion (GBP 5 billion), the sector has warned this could come at a cost to future offshore energy investment and ultimately the taxes and jobs associated with a strong UK sector, OEUK said in the statement.

“We continue our dialogue with No10, HMT and BEIS to ensure the sector is heard throughout the process of designing the legislation,” OEUK External Relations Director Jenny Stanning said in an organization statement.

“We continue to call for a meeting with the Treasury to set out the positive contribution of this sector … Our industry is very proud to pay its taxes and support the UK government and consumers, especially in difficult times like these,” Stanning added in the statement. 

“The Treasury believes our sector will contribute nearly GBP 13 billion [$15.8 billion] towards the government’s GBP 15 billion [$18.2 billion] package to support consumers. The problem is that new taxes dent investor and industry confidence. That is why the industry always considers a stable and predictable fiscal regime to be key to its investment criteria,” Stanning continued.

Rigzone has asked HM Treasury if it has any comment on OEUK’s latest statement but has not yet received a response from the government department at the time of writing.

The UK government revealed Tuesday that it is seeking public views on draft legislation for the Energy (Oil and Gas) Profits Levy ahead of the publication of the bill. This is said to be to ensure that the legislation operates as the government intends. The consultation will close on June 28.

In its consultation description, the government noted that, on May 26, it announced a new 25 percent surcharge on the “extraordinary profits the oil and gas sector is making”.

“It will raise around GBP 5 billion [$6 billion] over the next year which will go towards supporting people with the cost of living support measures, also announced in May,” the consultation description added.

The draft legislation includes a sunset clause for the Energy Profits Levy, effective at the end of December 2025, the government highlighted.

To contact the author, email andreas.exarheas@rigzone.com


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