Expanding windfall tax may threaten investment, OEUK warns

Offshore Energies UK (OEUK) has warned that windfall taxes could deter investment in the North Sea if they are further expanded.

Speaking to City A.M., Mike Tholen, acting chief executive of OEUK, raised concerns over government proposals to expand the Energy Profits Levy to electricity generators amid the ongoing energy crisis.

He told the publication that the government needed to be “really careful” as the country needs the domestic energy sector to continue investing and generating supplies “at a time when energy security is so important”.

Tholen said: “It’s a very delicate eco-system out there, so be very careful what you wish for. You may get a result that is simply not conducive to the challenges we all face.”

The Energy Profits Levy, introduced by previous chancellor Rishi Sunak, is a further 25% on North Sea oil and gas operators, alongside the 40% special corporation tax rate companies already pay.

The government said the levy would generate a further £5bn this year, which will go towards easing household energy bills, with the price cap set to rise 80% to £3,549 per year from October.

OEUK’s comments to City A.M. about the windfall tax follows the publication of its Economic Report, which revealed combined bills for households across the UK will reach £108bn when the new price cap takes effect next month.