Insight
UK government swoops on North Sea windfall profits
This report is currently unavailable
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
After months of political pressure, the UK government is increasing the tax payable on oil and gas production. Instead of raising existing tax rates, it has added a third tax – the Energy Profits Levy – which will apply from May 2022. The overall tax rate will increase by 25% to 65% but an 80% investment allowance is deductible. The industry won’t like it; aggregate producer cash flow will be 18% lower in 2022 than it would have otherwise been. But neither industry nor government were anticipating US$100/bbl Brent and US$30/mmbtu gas. Corporate profits will still be higher than what would have been anticipated six months ago.
Table of contents
-
Executive summary
- What has changed?
- Redistributing the windfall
- Which companies are most impacted?
- Industry reaction and the case for fiscal predictability
Tables and charts
This report includes the following images and tables:
- UK marginal petroleum tax rate 1975-2022
- UK petroleum tax rates and capital allowances
- UK government versus company share
- Transfer of cash flow from companies to government (2022/2023 fiscal year)
- Profit and tax breakdown current versus new
- Top producers: UK upstream in a global context
- UK capex committed to new projects by year versus tax rate
- Illustrative example of smooth sliding scale for a progressive tax rate
What's included
This report contains:
Other reports you may be interested in
Asset Report
Midland Valley CBM unconventional concept play
A detailed analysis of the Midland Valley CBM unconventional play.
$2,800
Insight
The quest for a new UK North Sea fiscal system
Agreement on what succeeds the Energy Profits Levy will be far from straightforward
$1,350
Insight
Post-EPL: is there a Phoenix in the ashes of the UK upstream sector?
It's not too late for the government and industry to rescue the North Sea
$1,350
