In a statement sent to Rigzone recently, industry body Offshore Energies UK (OEUK) said the industry urgently needs a firm date for HM Treasury’s (HMT) North Sea tax plan.
OEUK revealed in the statement that the group has written to UK Chancellor of the Exchequer John Healey asking for urgent talks ahead of HMT’s next budget in October “to re-affirm the government’s commitment to a new tax regime for North Sea oil and gas production”.
“Geopolitical volatility is affecting energy security and eroding investor confidence in the North Sea,” OEUK warned in the statement. The organization noted that bringing forward the Oil and Gas Revenue Levy (OGRL) from 2030 to early 2027 “would be a ‘win-win’ for Britain, offering additional government funds that could be used to address the cost of living crisis”.
OEUK revealed in the statement that it has calculated the new tax would unlock GBP 50 billion ($67.5 billion) worth of investment “supporting jobs and providing a major boost to the economy”.
“By investing more the energy sector pays more tax, not less,” OEUK pointed out.
OEUK highlighted in its statement that the call for reform comes exactly six months since Rachel Reeves, the previous Chancellor, “told energy companies that the government supported in principle the end to the Energy Profits Levy and the introduction of a new windfall mechanism”.
The industry body noted that the OGRL, which it said is the Treasury’s permanent successor tax to the Energy Profits Levy, proposes a 35 percent levy on revenues when the price of a barrel of oil is above $90 and a therm of gas is above 90p ($1.22), in addition to the ring fenced corporation tax rate of 30 percent and the supplementary charge of 10 percent.
OEUK outlined that its call for reform follows “unconfirmed reports last weekend that Chancellor Healey was considering a further extension to the temporary Energy Profits Levy”. This was introduced in 2022 following Russia’s invasion of Ukraine and imposes a headline 78 percent rate of tax on North Sea production profits, OEUK highlighted.
“Six months ago … the last Chancellor Rachel Reeves told industry that she supported in principle the end of the Energy Profits Levy (EPL) and the introduction of a new, fairer windfall mechanism,” OEUK Chief Executive David Whitehouse said in the statement.
“The future of the sector and Britain’s ability to continue domestic oil and gas production depend on a fiscal landscape that encourages investment,” he added.
“The Treasury’s proposals offer a tax regime that responds appropriately to market conditions rather than treating ordinary commercial North Sea returns as a windfall,” he continued.
“We are not arguing against higher taxes during periods of high prices. We are asking John Healey to carry forward the policy of his predecessor and work with our offshore sector to implement the OGRL in early 2027,” he said.
Whitehouse outlined in the statement that bringing the new levy forward to next year “recognizes the social advantages of prioritizing homegrown energy over imported energy which involves higher methane emissions”, and said it will “revitalize investment in the North Sea”.
“More investment means more security, more jobs for the UK, and more tax revenue for the Treasury,” he added.
“As government sets-out its reindustrialization agenda, the Chancellor has been vocal in his commitment to British resources, British jobs, and British security. Supportive North Sea policies will undoubtedly boost these commitments,” he went on to state.
Rigzone contacted HMT and the UK Department for Energy Security and Net Zero (DESNZ) for comment on OEUK’s statement. In response, a UK government spokesperson told Rigzone, “we are making sure the North Sea has a prosperous and sustained future through record investment that helps deliver the next generation of skilled jobs while growing the clean energy industries of the future”.
The HMT response highlighted that the EPL remains in place as a temporary windfall tax, currently levied at 38 percent, and noted that the design incorporates a price floor – the Energy Security Investment Mechanism (ESIM) – where if both average oil and gas prices fall below the ESIM thresholds for a period of six months, the EPL will end early.
HMT pointed out in the response that, when the EPL comes to an end, either on March 31, 2030, or earlier if the ESIM triggers, it will be replaced by the permanent OGRL, which HMT said will operate in times of high prices. HMT said the government has now published draft legislation for the OGRL, which it revealed will be included in the next available finance bill.
HMT highlighted in its response that the EPL has already raised around GBP 13 billion ($17.5 billion) since its introduction in 2022. It added that, at Spring Forecast 2026, the OBR (Office for Budget Responsibility) forecast the oil and gas sector will raise around GBP 8.3 billion ($11.2 billion) in tax receipts between 2025/26 and 2030/31 across the offshore fiscal regime. This included GBP 5.0 billion ($6.7 billion) of EPL receipts, until 30 September 2027, when the OBR forecast that ESIM will trigger and the EPL will cease, HMT said, adding that this revenue “will support vital public services”.
In its response, HMT stated that the North Sea “remains a vital national asset, supporting jobs, growth and the UK’s energy security”.
“We are clear that oil and gas will continue to play an important role in our energy system for decades to come, as we transition to clean power to protect jobs and tackle the climate crisis,” it added.
The UK Parliament website states that the budget, or financial statement, is a statement made to the House of Commons by the Chancellor of the Exchequer on the nation’s finances and the government’s proposals for changes to taxation.
The government has announced that the next Budget will take place on Wednesday, October 28, 2026, the site highlights. It notes that the last budget was delivered by the previous Chancellor of the Exchequer on Wednesday, November 26, 2025.
Healey was appointed Chancellor of the Exchequer on July 20, 2026. He was previously Secretary of State for Defense from July 5, 2024, to June 11, 2026. Andy Burnham became UK Prime Minister on July 20, 2026, replacing Keir Starmer.
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