Oil conglomerate laments irreparable harm from North Sea windfall tax implementation
UK North Sea Oil and Gas Industry Suffers as Windfall Tax Takes Toll
The CEO of EnQuest, Amjad Bseisu, has criticized the windfall tax imposed on oil and gas firms in the UK, labeling it as causing "irreversible damage" to the sector and leading to job losses. He delivered this statement during an operations update on Tuesday, arguing that the North Sea tax makes the UK a less appealing destination for investment.
The UK Energy Profits Levy (EPL) was launched in May 2022, targeting oil and gas companies in the North Sea. It is designed to tax the increased profits resulting from surging energy prices that followed Russia's invasion of Ukraine. The initial rate was 25%, but it increased to 35% in January 2023.
The government recently announced an extension of the EPL, which will run until March 2030. However, it includes a "price floor" mechanism, allowing the tax to end early if energy prices significantly decrease.
Earlier this month, London-listed company Harbour Energy denounced the government's "punitive fiscal position" while announcing the elimination of 250 jobs in Aberdeen.
Bseisu further argued that with commodity prices weakening, the UK is "the only country levying a windfall tax on homegrown energy producers, where no windfall profits exist." As a result, EnQuest has outlined a conservative investment strategy for the next 18 months due to the heavy tax burden.
In June 2025, EnQuest expects to pay nearly $100 million in windfall tax, with most tax payments for the year anticipated to be made in the first half. This arrangement is expected to result in lower cash outflows in the final six months of the year. Operating expenses for 2025 are predicted to exceed $450 million, but EnQuest remains committed to ongoing cost reductions.
Bseisu remains optimistic about a "material UK transaction in the short term" and believes EnQuest is well-positioned as a North Sea consolidator.
Analysts predict that the EPL could cost the Treasury £3 billion in tax receipts between 2025 and 2030 due to reduced investments and production. Additionally, future tax receipts estimates could have a shortfall of up to £10 billion due to falling production and disinvestment.
The windfall tax on oil and gas firms, such as EnQuest, in the UK's North Sea business sector, as a result of the UK Energy Profits Levy (EPL), is causing finance concerns and leading to reductions in investment and job losses. Bseisu, the CEO of EnQuest, argued that this tax makes the UK less appealing for business and finance, due to the lack of windfall profits in the current commodity price environment.
