Offshore Energies UK (OEUK) is calling for the Oil and Gas Revenue Levy (OGRL) to be introduced in early 2027, rather than from 2030 as currently proposed.
The organisation wants urgent talks with Chancellor John Healey ahead of October’s Budget, urging the Government to reaffirm its commitment to a new tax regime for North Sea oil and gas production.
OEUK say geopolitical volatility is putting pressure on energy security and weakening investor confidence in the UK’s North Sea, with a permanent replacement for the Energy Profits Levy needed to provide greater certainty.
It’s estimated that bringing forward the new regime could unlock £50 billion of investment in the UK’s offshore energy sector, supporting jobs and generating additional economic activity.
OEUK Chief Executive David Whitehouse said: “We are not arguing against higher taxes during periods of high prices. We are asking John Healey to carry forward the policy of his predecessor and work with our offshore sector to implement the OGRL in early 2027.
“Bringing the new levy forward to next year would be a ‘win-win’ for Britain. It recognises the social advantages of prioritising homegrown energy over imported energy which involves higher methane emissions, and it will revitalise investment in the North Sea.”
OEUK argues that increased investment would ultimately deliver more tax revenue for the Government, which could be used to help address the cost of living crisis.
The call comes six months after former Chancellor Rachel Reeves said the Government supported ending the Energy Profits Levy and introducing a permanent windfall mechanism.
The proposed OGRL would impose a 35% levy on revenues when oil prices exceed £66 per barrel and gas prices rise above 90p per therm. It would sit alongside a 30% corporation tax rate and a 10% supplementary charge on North Sea production.
The proposed changes come as uncertainty surrounds the future of the temporary Energy Profits Levy, which was introduced in 2022 following Russia’s invasion of Ukraine.
The levy currently contributes to a headline tax rate of 78% on North Sea oil and gas production profits.
The organisation says a clear timetable for the new tax regime would provide greater certainty for companies considering investment in the UK’s offshore energy sector while supporting the country’s energy security.
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