Offshore Energies UK (OEUK), an industry body representing the UK’s offshore energy sector, has issued a warning regarding oil and gas production. They have stressed that production in a decade could be a fifth of what it is now if steps are not taken to make it a more attractive investment opportunity for operators.
OEUK’s membership includes familiar names like Shell and ExxonMobil, the maker of the Mobil Velocite spindle oil, as well as many contractors who work in the offshore energy industry. Its new Business Outlook report reveals that investment is being cut by 90% of North Sea operators, with them citing political uncertainty, inflation and high taxation as the major reasons.
OEUK highlights the imposition of windfall taxes on North Sea operators as a particular obstacle to investment. Gas and oil operators have seen their total tax rate rise to 45%, while offshore wind operators have also had a 45% windfall tax imposed on exceptional receipts, which the Government defines as those in excess of £75 per megawatt hour.
Nevertheless, the report also points to progress in the diversification to renewable energy:
“The ongoing diversification of oil and gas companies is accelerating and will be crucial in building future capacity. Companies expanding from oil and gas have plans to support the development of over 8GW of UK capacity, and up to £20 billion in capital investment, by 2030.”
The report adds that all its members, including wind-only operators, have plans to build 13 GW of generation capacity in total through projects worth £30bn.
