EnQuest chief urges government to provide fiscal lifeline for North Sea

Amjad Bseisu, the chief executive of EnQuest, has called for a fiscal lifeline to be provided to North Sea operators, warning that investors are increasingly severing ties with the United Kingdom through asset sales and joint ventures. Speaking after the company announced its half-year results, Bseisu outlined how the basin has undergone dramatic changes as major oil and gas companies restructure their presence in the region. He noted that industry giants such as Shell, Equinor, and TotalEnergies have established arms-length joint ventures, while BP has moved to sell its UK upstream assets after more than six decades of exploration in the area.

The EnQuest boss stated that the cost of capital for the North Sea is rising, making future developments more difficult under the current tax framework. He expressed disappointment that the government did not proceed with replacing the energy profits levy with a new tax regime, a move that had been anticipated during the tenure of former chancellor Rachel Reeves. Bseisu explained that while there was hope for a transition to the oil and gas revenue levy, rising oil prices and geopolitical tensions involving Iran and the United States caused the decision to be deferred. He described this as a critical moment for the industry that was missed.

EnQuest has simultaneously pivoted towards international operations in Malaysia, Vietnam, and Indonesia, a strategy that has increased its proven and probable reserves to over 300 million barrels. Despite this global expansion, Bseisu indicated that the firm’s accumulated tax losses remain a useful tool for potential acquisitions within the North Sea. However, he declined to confirm whether EnQuest is specifically considering the assets currently being marketed by BP. The company is continuing to reduce its workforce at the Sullom Voe oil terminal in Shetland, a move driven by declining oil production levels at the site.

Bseisu’s comments align with recent appeals from the trade body Offshore Energies UK, which has written to new chancellor John Healey urging him to accelerate the implementation of the oil and gas revenue levy. The industry body argues that bringing the new tax regime forward from 2030 to early 2027 would benefit the British economy by generating tax revenue that could help address the cost of living crisis. Offshore Energies UK estimates that this fiscal change would unlock 50 billion pounds worth of investment, thereby supporting jobs and boosting economic activity.

The proposed oil and gas revenue levy is designed as a permanent successor to the energy profits levy. It introduces a 35 per cent tax on revenues when the price of a barrel of oil exceeds 90 dollars and a therm of gas exceeds 90 pence. This additional tax is levied on top of the existing ring-fenced corporation tax rate of 30 per cent and the supplementary charge of 10 per cent. Current market data shows that Brent crude began trading at 96.28 dollars, while the UK wholesale gas benchmark rose to 178.8 pence per therm, both figures significantly above the proposed tax thresholds.

These developments follow reports that Chancellor Healey is considering extending the energy profits levy, which was introduced in 2022 following Russia’s invasion of Ukraine. The current levy imposes a headline tax rate of 78 per cent on North Sea production profits. David Whitehouse, chief executive of Offshore Energies UK, stated that the sector’s future depends on a fiscal landscape that encourages investment. He argued that the Treasury’s proposals treat commercial returns appropriately rather than as windfalls, and that the government should work with the offshore sector to implement the new levy in early 2027 to secure energy independence and economic stability.