North Sea producers want Prime Minister Andy Burnham to replace the Energy Profits Levy with a levy triggered only when prices spike. Campaigners say the change could bring in less revenue than the current tax, and environmental groups dispute that new drilling would cut bills.
Offshore Energies UK (OEUK) is urging the government to end the Energy Profits Levy next January and approve the Rosebank and Jackdaw projects. The trade body says the moves could unlock 111 projects and attract £50 billion in investment.
Burnham has yet to decide on the two fields, which are owned by an Equinor and Shell joint venture known as Adura.
Industry wants a price-triggered levy
The OEUK says the existing levy, in place until 2030, has stifled investment in recent years. It recommends an Oil and Gas Revenue Levy (OGRL) that applies only when prices spike.
The windfall tax has so far raised about £12 billion. However, research for the NGO Global Witness found that with oil at around $100 a barrel, the OGRL would raise £8.6 billion less than the current tax by 2030. At $70 a barrel, the analysis says, the OGRL would bring in no funds, against £4.6 billion under the current levy.
Support and scepticism over new drilling
EDF Energy head Simone Rossi backs the projects. Speaking to the BBC, she said: "For me, it's really a no-brainer." Rossi said the projects would support job creation and increase government tax receipts.
Critics disagree. Uplift called the OEUK report a fantasy and described the North Sea as an ultra-mature basin with very little reserves left. Separate analysis by Luke Hatton of Imperial College London suggests approving Rosebank and Jackdaw would not reduce U.K. bills or improve energy security.
Burnham said during the Makerfield by-election in June that he was open-minded about new North Sea oil licences, and has more recently promised a pragmatic approach.
Source: Oilprice.com
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