The UK government is engaged in high-stakes discussions with North Sea oil and gas companies as it considers ending the controversial Energy Profits Levy (EPL) earlier than planned, according to industry sources familiar with the matter.
Officials from HM Treasury and senior representatives from offshore operators have held an intense series of meetings in recent weeks, highlighting the growing urgency of the issue ahead of the Chancellor’s Spring Statement.
The talks reflect increasing concern within government about the investment outlook and long-term viability of the UK offshore sector.
At the centre of the negotiations is the future of investment in the North Sea, a mature basin already under pressure from natural decline and rising costs.
Oil and gas companies have warned that the EPL, which has pushed effective tax rates close to 80%, is undermining project economics and discouraging new capital commitments.
UK government keeps the "windfall" tax on the country's North Sea oil and gas industry until March 2030. The headline tax burden for the industry stands at ~78%.
Windfall has an interesting meaning when Brent is struggling to stay above $60 a barrel.— Javier Blas (@JavierBlas) November 26, 2025
During the discussions, operators are understood to have outlined delayed developments, risks to employment across the supply chain, and the growing diversion of capital to regions offering greater fiscal stability.
Treasury officials, meanwhile, are seeking detailed assurances that any early removal of the levy would lead to measurable increases in investment and production.
The talks underscore the difficult balance facing policymakers.
Ending the EPL early could help restore investor confidence, support jobs, and bolster domestic energy security, but would also reduce near-term tax revenues at a time of strain on public finances.
As a result, any decision is likely to involve conditions or a phased approach rather than an immediate repeal.
With the Spring Statement approaching, the outcome of these high-stakes negotiations is expected to play a significant role in shaping the government’s future approach to North Sea taxation.
Leave a Comment