Taxes on North Sea Oil and Gas Firms Threaten UK Jobs and Energy Security

Jobs, investment, and the United Kingdom’s energy security are at risk as high taxes continue to burden North Sea oil and gas producers. Brian Gilvary, chairman of Ineos Energy, sharply criticised the government for persisting with a 38 per cent levy on the profits of North Sea operators. This decision leaves the headline rate of tax on oil and gas activities at 78 per cent, a level Gilvary argues is undermining Britain’s critical energy sector.

In a recent commentary, Gilvary, formerly group chief finance officer at BP and now a senior executive at Ineos Energy, warned the current tax policy jeopardises thousands of skilled jobs and exposes the UK to market volatility and shocks in supply. Citing data from the North Sea Transition Authority, oil and gas output is expected to fall to 33 million tonnes by 2030, compared to 74 million tonnes in 2022. The sector’s tax receipts have halved in two years, dropping from £9 billion in 2022-23 to £4.5 billion in 2024-25.

The government introduced the energy profits levy three years ago to capture windfall revenues after the significant profits stemming from the war in Ukraine. This windfall tax helped finance support for households facing increased energy bills. However, oil companies have repeatedly cautioned that the tax is precipitating job losses. Harbour Energy, a major North Sea operator, attributed 350 redundancies in the past year directly to the levy.

The government has announced plans to replace the energy profits levy in 2030 with a new mechanism featuring a 35 per cent additional tax rate on sales that exceed specific price thresholds. Gilvary argues this measure will not come soon enough to prevent lasting damage, warning the continued imposition of the levy risks triggering an irreversible divestment from the North Sea industries.

A Treasury spokesperson has asserted that oil and gas will remain vital for decades and that the planned replacement tax offers the sector greater long-term clarity and predictability for investment decisions. Ineos Energy, part of the broader Ineos group controlled by Sir Jim Ratcliffe, Andy Currie, and John Reece, is a significant operator in North Sea energy production and supply. The company’s activities support a wide network of highly skilled workers.

Gilvary’s statement arrives following warnings by Ratcliffe that the European chemicals industry is also under strain from high energy costs, restrictive taxes, and rising competition, endangering up to a million regional jobs. At a sector level, industry bodies estimate 35000 jobs could be lost because of project cancellations and deferred investments linked to the windfall tax. The levy was increased in October last year and extended to remain until 2030.