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The leading trade association for Britain’s offshore energy industry has said the situation for the industry has become “even worse”. UK government to intervene.
Offshore Energies UK (OEUK) has released an open letter addressed to Industry Minister MP Chris McDonald, calling on the government to work with the industry and implement a sustainable tax regime from 2026.
The letter has been co-signed by more than 110 companies as OEUK says the impact of the tax on investment and jobs is hitting the entire sector.
He says this includes operations and maintenance companies, catering companies and specialist high-tech manufacturers shetland And orkney, Inverness And grangemouthTo Humberside and Teesside, East Anglia and the North West, and Cornwall.
The letter says the multi-revenue approach that oil and gas companies employ is “essential to the success” of companies during the transition to renewable energy.
It said: “The hundreds of companies at the heart of UK PLC operate a multi-revenue approach, pursuing oil and gas, decommissioning and renewables opportunities together.
“This is no coincidence, and this business model is essential to the commercial and economic success of companies throughout the transition. It allows us to retain 200,000 jobs in the UK, including 90,000 in Scotland.”
OEUK says that without a permanent replacement for the Temporary Energy Profit Levy (EPL) the country risks losing thousands more jobs, billions of investment and the vital supply chain capacity needed for the UK’s energy security and transition.
OEUK has also said that the industry is losing 1,000 jobs per month under the current financial arrangement.
The trade union says if the tax is reformed as OEUK is proposing, the sector could add £137 billion to the economy by 2050 and support 23,000 additional jobs by 2030.
The letter said the previous letter was written to the government a year ago and since then “the situation has worsened”.
It added: “The challenges have only intensified, as each week there are reports of additional companies being forced to reduce their workforce and shift resources overseas to remain viable. These ongoing losses not only impact our workforce, but also threaten the resilience and competitiveness of the UK supply chain as a whole.
“We are seeing a sharp decline in activity that is eroding the value of the sector and the supply chain capacity essential to our energy future. Job losses are occurring on an unacceptable scale, and supportive policy is urgently needed to unlock investment, drive economic growth and secure the UK’s energy transition.”
However, environmental groups have been critical of the letter and accused it of “extortion”.
Rosie Hampton, oil and gas campaign manager for Friends of the Earth Scotland, said: “This threatening letter amounts to little more than extortion with the oil and gas industry threatening to sack even more workers if they are not allowed to make bigger profits.
“Many oil giants such as Shell, BP and Equinor have already reduced their investments in renewable energy in recent years, exemplifying their obsession with profit above everything else.
“Energy companies have made profits of more than half a trillion pounds since the start of the energy price crisis, yet they continue to complain about paying only a tiny fraction of this to fund the vital public services on which the rest of us depend.
“Jobs in oil and gas have halved during 2014, despite hundreds of licenses being issued.
“Supporting energy activists means politicians must create credible, funded transition pathways into well-paid, secure renewable jobs – not chasing the remains of a mature North Sea basin or chasing pipe dreams like carbon capture.”
A government spokesperson said: “We are taking a responsible approach that recognizes the long-term role of the sector while exploring what happens after the end of the energy benefits levy, so that companies continue to invest and pay their fair share of tax.
“The oil and gas sector will be with us for decades to come, as we deliver a fair and orderly transition to the North Sea to boost growth and secure thousands of skilled jobs, with the largest investment ever in offshore wind and the first of three carbon capture and storage clusters.”