Trade association warns of offshore energy industry ‘deterioration’

The leading trade association for the UK’s offshore energy industry has said the situation in the industry has “deteriorated further” as it called on the UK Government to intervene.

Offshore Energies UK (OEUK) has released an open letter addressed to MP Chris McDonald, Minister for Industry, calling for the Government to work with the industry and implement a permanent tax regime from 2026.

The letter is co-signed by more than 110 companies as the OEUK says the tax on investment and jobs is being felt by the entire sector.

They say this includes operations and maintenance companies, catering firms, and specialist high tech manufacturers from Shetland and Orkney, Inverness and Grangemouth, to Humberside and Teesside, East Anglia and the North West, and Cornwall.

The letter says the multi-revenue approach oil and gas companies operate on is “essential to the success” of companies throughout the transition to renewables.

Firms have written to Industry Minister Chris McDonald (Jacob King/PA). PA Media

It says: “Hundreds of companies at the heart of UK plc operate a multi-revenue approach, progressing oil and gas, decommissioning and renewable opportunities in tandem.

“This is not a coincidence, and this business model is essential to the commercial and economic success of companies throughout the transition. Allowing us to maintain 200,000 jobs in the UK, including 90,000 in Scotland.”

The OEUK says that without a permanent replacement for the temporary Energy Profits Levy (EPL) the nation risks losing thousands more jobs, billions in investment, and critical supply chain capability essential for the UK’s energy security and transition.

OEUK has also said that under the current fiscal regime the industry is losing 1,000 jobs a month.

The trade association says if the tax is reformed as OEUK proposes, the sector can add £137 billon to the economy by 2050 and support 23,000 additional jobs by 2030.

The letter says a previous letter was written a year ago to the Government and since then “the situation has deteriorated further”.

It says: “The challenges have only intensified, as each week brings news of additional companies being forced to reduce their workforce and shift resources abroad to remain viable. These ongoing losses not only affect our employees but also threaten the resilience and competitiveness of the UK supply chain as a whole.

“We are witnessing an accelerated decline in activity that is undermining the value of the sector and the supply chain capability we need for our energy future. Job losses are occurring at an unacceptable scale, and there is an urgent need for supportive policy to unlock investment, drive economic growth, and safeguard the UK’s energy transition.”

However, environmental groups have been critical of the letter, accusing it of “extortion”.

Friends of the Earth Scotland’s oil and gas campaigns manager Rosie Hampton said: “This menacing letter is little more than extortion with the oil and gas industry threatening to sack even more workers if they aren’t allowed to make larger profits.

“Many of these oil giants like Shell, BP and Equinor have already scaled back their investments in renewables in recent years, exemplifying their obsession for profit above everything else.

“Energy companies have made off with over a half a trillion pounds in profits since the start of the energy price crisis, yet they are consistently whingeing about having to pay a tiny fraction of this back to fund the vital public services on which the rest of us depend.

“Jobs in oil and gas have halved since 2014 despite hundreds of licences issued during that time.

“Supporting energy workers means that politicians should create credible, funded transition pathways into well-paid, secure renewables jobs – not chasing the dregs of a mature North Sea basin or pipe dreams like carbon capture.”

A Government spokesperson said: “We are taking a responsible approach that recognises the long-term role of the sector while exploring what follows the end of the Energy Profits Levy, so firms 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 in the North Sea to drive growth and secure tens of thousands of skilled jobs, with the biggest ever investment in offshore wind and three first-of-a-kind carbon capture and storage clusters.”