North Sea Oil Tax Row Trumps UK Political Debate

President Trump has sharply rebuked the UK government over its tax regime for North Sea oil, declaring the resource a “treasure chest” and warning high taxes threaten its economic potential. During the final day of a private visit to Scotland, the US president highlighted what he called excessively high levies that discourage investment from drillers and oil companies. On his Truth Social account, Trump wrote, “North Sea Oil is a treasure chest for the United Kingdom. The taxes are so high, however, that it makes no sense. They have essentially told drillers and oil companies that ‘we do not want you’. Incentivise the drillers, fast. A vast fortune to be made for the UK, and far lower energy costs for the people.”

Trump was in Scotland for the opening of a new Trump International golf course on the Menie estate in Aberdeenshire and met with First Minister John Swinney. In a press conference at his Turnberry golf course, he advised Prime Minister Keir Starmer to cut taxes and address small-boat crossings, emphasising his opposition to current energy policy. His visit coincides with key developments in UK energy strategy, particularly Labour’s approach to oil exploration in the North Sea.

The Labour party now supports existing oilfields and discoveries but has pledged not to issue new licences for offshore exploration, aligning with the International Energy Agency’s guidance to limit new development to achieve net zero by 2050. Labour’s manifesto policy, announced last year, made clear it would not revoke current licences, referencing major projects like Shell’s Jackdaw gas field and Equinor’s Rosebank oilfield. These projects have faced legal challenges, but regulatory revisions are expected to allow them to proceed under new environmental rules.

North Sea oil and gas production peaked in 1999 and has steadily declined, prompting calls to maximise remaining output through 2050. The introduction of the energy profit levy in 2022, originally a 25 per cent surcharge later increased and extended, brought the effective tax rate on North Sea profits to 78 per cent in the most recent budget. The sector has warned that the current tax burden inhibits investment and job creation, particularly in an ageing basin facing high costs.

Some oil firms have already reduced headcount and redirected investments overseas, while consolidation in the industry continues. Shell and Equinor are merging their North Sea operations, and smaller players like Ithaca Energy and Serica Energy are acquiring rivals. Trade group Offshore Energies UK argues existing tax policies put tens of thousands of jobs at risk, especially as renewable energy sectors are not yet able to absorb the displaced workforce.

Environmental advocacy groups continue to call for an accelerated transition away from oil and gas, arguing that new drilling will not significantly reduce consumer bills or increase the UK’s long-term energy security. As the UK government seeks a balance between economic interests, energy security and environmental commitments, the future of North Sea oil will remain at the centre of both political debate and economic strategy.