The UK government has announced plans to reform its tax regime for oil and gas producers once the current levy expires in 2030.
According to reports Reuters.
The government is seeking feedback from industry players and other stakeholders on policy options, including taxing “excess income”.
The consultation will be open until May 28, and no price threshold is specified.
The new regime may apply to the use of financial products to save producers from price fluctuations.
The Conservative government first proposed a 25% surprise tax in May 2022 as Russia invaded Ukraine.
Tax revenue increased to 35% in November 2022 and extended by one year in March 2024.
In October, the British Labor government raised its unexpected tax on oil and gas producers from 35% to 38%, extending the tax for one year to March 2030.
This raises the industry’s title tax rate to 78%, the highest in the world.
Oil and gas producers have expressed concerns that unexpected taxation has affected profits and created investment uncertainty, accelerating a decline in oil and gas production in the UK’s North Sea.
The UK faces a critical situation, with gas reserves “lower” as temperatures drop and increasing demand for gas power plants.
Centrica, an energy service company, pointed out that natural gas reserves are much lower than last year and currently have only 26% of capacity, accounting for about half of the usual level.
The same trend has been seen throughout Europe, with gas storage at 69% on January 7, compared with 84% in 2024 at the same time.
British Energy Minister Ed Miliband said oil and gas production will continue to play a key role in the energy mix.
The report said the government is committed to maintaining its existing areas throughout its life and does not intend to issue new oil and gas licenses.
In addition to oil and gas production, the government aims to ensure growth in clean energy such as hydrogen, carbon capture and wind, creating new jobs in the process.
“The UK overhaulsed oil and gas accident tax system after 2030” was originally created and published by GlobalData-owned brand Offshore Technology.
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