North Sea Oil and Gas Tax Scrapping Could Meet Half of UK Energy Needs By 2050

A leading trade body, Offshore Energies UK, has suggested the United Kingdom could meet up to fifty per cent of its domestic energy requirements until 2050 if the current tax regime on North Sea oil and gas was removed. The current projections indicate the basin is set to deliver only around a quarter of the country’s energy needs over the coming decades, as high taxation continues to deter much needed investment.

Thousands of jobs have already been lost in recent years as companies either pulled out of the basin entirely or sharply cut investment. The introduction of the energy profits levy in May 2022, initially set at twenty five per cent, rapidly increased to thirty five per cent, and then to thirty eight per cent—under changes extended to 2030—have created a marginal tax rate of seventy eight per cent on profits from North Sea operations when combined with other levies. Industry groups argue these conditions have hampered the region’s ability to reach its full potential and undermined the stability needed for major investment decisions.

According to Offshore Energies UK’s latest Economic Report, imported oil and gas currently form about forty four per cent of Britain’s energy mix, with the trade body warning this could climb to more than seventy per cent by the end of the decade. The group maintains that domestic production has a lower carbon footprint than importing energy and provides crucial jobs and value for the British economy.

Analysis from Westwood Global Energy Group projects that only 4.3 billion barrels of oil equivalent can be extracted under the present regulatory framework. Offshore Energies UK believes that significant changes to fiscal and regulatory policy could boost this figure to 7.5 billion barrels, helping both to create jobs and strengthen national energy security.

David Whitehouse, chief executive of the trade group, emphasised the presence of significant untapped reserves in the North Sea and stressed the need for urgent reform to secure the future for UK-based firms and workers. Stable and reliable homegrown energy sources are positioned as key for maintaining high value employment and shielding households from international volatility in energy prices.

While government policy remains committed to managing existing fields, new licences for exploration are currently off the table in pursuit of climate targets. The debate continues between expanding domestic production as a route to energy security and focusing investment on the transition to lower carbon sources.