A leading UK oil and gas producer has announced it will halt investment in the North Sea unless Rachel Reeves reverses her tax increases on the industry.
Serica Energy, which accounts for 5% of the UK’s gas production and employs 1,000 people, warned that new investments could become unfeasible if the industry loses its tax allowances, as the Chancellor pledged.
According to CEO Chris Cox in the company’s latest financial report, this move could jeopardise the development of the Buchan Horst project, which is considered one of the UK’s most promising remaining gas and oil fields.
Cox’s warning, part of a broader outcry from the offshore sector about what they see as “excessive” taxation, comes amid predictions of a challenging September for UK industry, with 6,000 jobs expected to be cut in the oil refining and steel sectors.
In a commentary on Serica’s first-half 2024 results, Cox stated: “The outcome of the Autumn Budget regarding capital allowances is crucial for future projects such as Buchan Horst and various infill wells. Maintaining full capital investment allowances and replacing the energy profits levy with a long-term, sustainable fiscal regime by 2030 is essential for continued investment in the domestic oil and gas sector.
These investments are vital not only for new fields but also for extending the life of current operations, supporting companies across the UK supply chain.
“Serica has invested over £1 billion in the UK supply chain over the past five years. Future expenditures of this magnitude will be at risk if the tax regime renders further investment economically unfeasible.”
