Confidence in North Sea at all time low, research shows

Industry confidence in the North Sea over the next five years is at an all-time low with the sector "in crisis", according to new research from Aberdeen and Grampian Chamber of Commerce.

The study comes as Chancellor Rachel Reeves will deliver the autumn statement at the end of the month with windfall tax expected to be increased from 75% to 78%.

Today, the Chamber has warned that 100,000 jobs rest on her sparing businesses operating in the North Sea from another "damaging tax raid".

Prior to the General Election, Aberdeen & Grampian Chamber of Commerce warned that the new government had 100 days to save 100,000 jobs by restoring confidence among investors in the UK oil and gas industry.

The Chamber’s 40th Energy Transition Survey shows confidence in the North Sea over the next one to five years is at an all-time low.

It notes this is far worse than at any point during the financial crisis, oil price crash or during the Covid-19 pandemic.

The Chamber said firms are bracing for a bleak situation if the Labour government goes ahead with its pledges.

AGCC Chief Executive Russell Borthwick said the Energy Profits Levy, and recently announced plans to increase and extend it, are having "a chilling effect on the sector".

Mr Borthwick said: "Unless steps are taken in the Budget to address this, then the damaging consequences in terms of future investment activity, employment and the economic future of the North-east Scotland region could be severe."

“You do not fix a grave economic situation by putting tens of thousands of people out of work, which is looking increasingly like the outcome we face after October 30.

"The Energy Profits Levy appears to be the only “windfall tax” on any sector, anywhere in the world. On the basis that windfall conditions no longer exist and market prices for oil and gas have returned to ordinary levels, Treasury should maintain allowances within the current oil and gas fiscal regime and work towards the swift removal of the EPL entirely."

AGCC has proposed a five-point plan to the Treasury which is believes will protect jobs in the North Sea.

It involves resisting further increases to the Energy Profits Levy and removing it completely by the end of 2025.

An HMT spokesperson said: “We are making the UK a clean energy superpower, and it is right that the oil and gas sector contributes to this transition by helping to fund Great British Energy headquartered in Aberdeen.

“We are working closely with the industry to ensure a stable investment environment that will be supported by our business tax roadmap and capping corporation tax at 25%, while developing a successor regime to the temporary Energy Profits Levy to secure the sector’s role in the UK’s energy mix.”

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