LONDON: The United Kingdom can likely produce nearly twice as much oil and gas over the next 25 years from its ageing North Sea basin compared to current projections, if fiscal and regulatory regimes change, according to an industry lobby group.
The United Kingdom can unlock an additional 3.5 billion barrels of oil equivalent across 111 projects if the government revises its licensing approach, scraps a controversial windfall tax and replaces it with a permanent price-triggered mechanism sooner rather than waiting until March 2030, according to Offshore Energies UK’s (OEUK) annual Business Outlook Report.
Within about a year of removing the windfall tax and licensing barriers, “there will be an immediate uptick” in production, Ben Ward, market intelligence manager at OEUK, told reporters.
“Significant benefits come after two, three, four years.”
British oil and gas companies are intensifying their calls for reforms as the Middle East conflict, now in its fourth week, highlights energy supply vulnerabilities and the nation’s exposure to geopolitical shocks.
The United Kingdom relies on imported energy for around 40% of its total energy needs.
Earlier this month, as the Iran war pushed up commodities prices, UK Chancellor of the Exchequer Rachel Reeves backtracked on plans to scrap the windfall tax on oil and gas producers.
The Energy Profits Levy, introduced by the previous Conservative government after Russia’s invasion of Ukraine drove up energy prices in 2022, has since been extended and increased several times, pushing the headline tax rate to 78%.
The Labour Party also remains committed to its 2024 manifesto not to issue any new exploration licences.
In the reform scenario, more than a third of the additional reserves and resources –around 1.3 billion barrels – would come from gas projects. — Bloomberg
