As the UK government kicked off consultations on a successor tax regime to the Energy Profits Levy (EPL), Anasuria said that changes are needed “now” to save the North Sea.
Anasuria Operating Company (AOC) chief executive Richard Beattie said: “I would say we need to make the changes now.
“I do think the government is listening, I do think there has been positive engagement, I think we’ve seen shoots of that at the last budget.”
Since its introduction in 2022 by then chancellor Rishi Sunak, the EPL, or windfall tax, has been a pain point for the UK oil and gas industry.
Initially bringing the headline rate of tax imposed on North Sea operators to 75%, late last year the Labour government hiked rates by 3% as it closed investment incentives previously afforded to oil firms.
In the Autumn Budget, chancellor Rachel Reeves also extended the end date of the EPL to March 2030, something it has stuck to as the government launched a consultation on the country’s tax regime and licencing regulations.
However, waiting until the start of the next decade to rethink the North Sea’s controversial tax regime may be too late to save investment.
“Every drinks reception I’m at, I’m talking to people and they’re talking about putting investment on hold, massive opportunities that they have that they want to invest in but with the uncertainty in terms of the number of changes that just brings natural suspicion,” Beattie added.
He argued that, unlike how the UK was previously an appealing place to invest for oil and gas companies “it is simply unattractive” in the current global context.
Addressing EPL ‘flaws’
When it launched the consultation process, the government said that authorities will work with industry, communities, trade unions and wider organisations to determine what the new regime could look like to ensure it can respond to any future shocks in commodity prices.
To ensure that North Sea operators don’t end up with a raw deal, the AOC boss highlighted some “flaws” in the current regime that need to be addressed.
“It’s a flat rate that goes out to 2030, regardless of profits,” he highlighted.
“So, if you’re generating £10 million of revenue or a billion of revenue, you pay the same amount of tax effectively at the end of it.
© Shutterstock Feed“It doesn’t differentiate between oil and gas; it assumes almost that those are linear products. They’re not. In terms of pricing, they’re separate.”
Beattie explained that “90% of our product is oil” and that with the price of a barrel dropping below $70 the industry is experiencing “three-to-four-year lows”.
“I often liken it to income tax, can you imagine if we all paid exactly the same rate of tax?”
“If you earn, let’s just say, £25,000 per year you pay an income tax rate set at 50% and somebody who earns £250,000 pays 50%, would we say that’s fair as a nation? No, we don’t, we adjust, we have progressive taxes in place that make sure that they’re adjusted.
“So, I think the one-size-fits-all needs to change.”
With the current system in place, the thing the causes Beattie the most frustration is how investment within the country is being impacted by a tax regime that makes the UK less appealing when opportunities exist.
Unlocking ‘hundreds of millions of dollars’ of investment
The year after the EPL was implemented, 90% of North Sea operators slashed spending, trade body Offshore Energies UK reported.
The AOC boss said: “I can see within our small company and our shareholders that we have opportunities and a big appetite to invest hundreds of millions of dollars.”
He said some of this investment is “underway” already, however, more could be spent.
“There’s opportunities right across the UK to grow and invest in the economy but these things are being put on hold, or they’re being removed whilst we invest abroad.”
As a result, he called for government to “take the shackles off” so that the industry can take advantage of the “phenomenal opportunity for investment into the UK”.
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