OEUK Congratulates Starmer, Raises Offshore Industry Concerns

The industry body Offshore Energies UK (OEUK) has congratulated Labour leader Keir Starmer on his party's victory in the general election, while also voicing concerns about the future of the country's offshore sector.

Earlier today, it was confirmed that the UK’s Labour Party secured over the required 326 seats in the 2024 general election, ensuring a majority in parliament. Consequently, Keir Starmer is set to become the new prime minister. Reports indicate that Labour currently holds 409 seats, the highest since 2001 during Tony Blair's leadership, with some votes still to be counted.

This governmental shift will impact the relationship between the new prime minister at 10 Downing Street and the UK offshore energy industry.

OEUK expressed its commitment to collaborating with the new government on advancing a homegrown energy transition, safeguarding energy security, jobs, and skills, and creating an "irresistible investment environment" in the UK.

However, OEUK raised concerns about Labour’s proposals for an additional windfall tax on domestic oil and gas production and the cessation of new oil and gas licenses in UK waters. The industry body argued that these measures would not foster the investment conditions necessary for the UK's energy transition to spur economic growth.

“These policies, if poorly managed, and without industry input will threaten jobs and undermine the decarbonisation of the UK economy. The details matter,” stated David Whitehouse, chief executive of OEUK.

The windfall tax, officially termed the Energy Profits Levy (EPL), was introduced by then Chancellor and soon-to-be former Prime Minister Rishi Sunak in 2022 to assist households with rising energy costs following Russia’s invasion of Ukraine. Initially set to end in March 2028, the 35% surcharge on profits due to high energy prices was extended to March 2029 earlier this year. This surcharge has increased the overall tax burden on UK oil and gas producers to about 75%.

Currently, UK gas prices are significantly lower than at the time the tax was introduced, and oil prices have returned to pre-invasion levels, making the windfall tax less defensible.

OEUK highlighted that the UK offshore energy industry is poised to invest £200bn in domestic energy projects over the next decade. The sector, which supports 200,000 jobs and provides secure domestic energy through a mix of oil and gas, wind, hydrogen, and carbon capture technologies, requires renewed confidence to invest.

“Labour leadership has recognised that North Sea oil and gas will be with us for decades to come and is committed to managing this strategic national asset in a way that does not jeopardise jobs. The transition is estimated to cost £1.4trn, the lion’s share of which will need to come from the private sector. We need the new Labour government to follow through on assurances to work in partnership with the sector, listen to our skilled people, and ensure no one is left behind in the UK’s energy transition,” Whitehouse added.