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Problem is… it would take time for new investment to generate significant taxable profits, especially at predicted oil prices, and probably not before the next General Election.

…favour gas and disfavour OIL.

While the EPL is in place, I don’t see how the government can remove or “renege” on the ESIM. I agree on the undeniable importance of gas. Also, gas does not have a “global price/market” in the same way oil does. The UK buying UK gas is cheaper than the UK buying US or Qatari gas. Therefore, I don’t see how they could favour gas and disfavour gas. As said, maintaining the EPL with the ESIM but separating oil and gas seems a quick, effective, and “sellable” way to help and encourage the UK’s oil and gas industry.

My thinking is that separation would help all but especially those producing mainly oil. How would it promote gas and hasten the demise of oil in the NS?

When the EPL was introduced there was no separation of oil and gas. The levy was based on total profits from oil and/or gas production. The ESIM’s later introduction gave different thresholds prices for oil and gas, but for the EPL to fall away required both oil and gas average prices to have been below their thresholds for the previous 2 quarters. Why was there the requirement for both prices to be below their thresholds? Sneaky practice to ensure the EPL stayed in place and/or to keep it simple for accounting and HMRC? Developing a formula to separate oil and gas profits would not be hard; at its simplest allocate costs based on the %age of revenue generated from each commodity. With average oil prices significantly below its ESIM threshold for well over 6 months and predicted to stay so until at least end 2026, if cunning was at play, linking oil and gas prices looks more and more to have backfired. Lower prices has resulted in both less EPL revenue and discouraged investment. Therefore, a separation of oil and gas at the Autumn Budget feels more and more possible. This way the EPL remains, so Labour can claim no breaking of manifesto commitments, but the industry gets some encouragement. Communicating at the same time the conditions of the successor fiscal regime would be the best but this feels unlikely. That’s my speculation. Yours?

…as it does not inform about ANYTHING not already known.

Aim, this article came across as strange timing as it does not inform about everything not already known. Probably a jouno just making content.

It would be interesting if Rosebank did become totemic for the NS’s future. And it would be good if the companies behind Rosebank give the message that it’s not just the government’s decision on the environmental impact re-submission that counts, but also the investor’s decision on economic viability based, in good part, on the fiscal conditions. Turn the tables on the government and drag out the start of actual production until fiscal conditions improve?

CONCLUSION

“It is hard to conclude other than that the Secretary of State is deluded when he champions the 2030 net zero target as a route to lower costs of energy through ever-cheaper renewables. Rather, it reflects a conclusion seeking a cost measure that confirms it.

The correct measure is system costs. The reality is that net zero by 2030 is expensive and that by dashing flat-out towards it, the result will be even higher costs. That points to an even more challenging reality: it is going to be expensive to decarbonise carbon consumption, and it is a delusion to think that having for so long not been paying the cost of the pollution our consumption is causing, by now paying for pollution, it is going to be all win–win. The price is not coming down, as heralded by the Secretary of State. It is going up, with a system requiring twice the generating capacity and much more transmission, lots of batteries and storage, and a great deal of back-up generation to keep the lights on, all to achieve the same amount of electricity. To think otherwise is to commit the broken windows fallacy – that by breaking windows, economic growth is increased. Replacing one set of windows with another is a net cost, and replacing the windows with more glass than was previously needed is a bigger cost still.

IT IS TIME TO BE HONEST ABOUT THE COSTS OF THE NET ZERO TARGET.”

A long read but well worth it.

https://dieterhelm.co.uk/energy-climate/the-price-of-energy-and-the-system-costs-of-renewables/

Yes, sounds like Waldorf are trying to buy time with the expectation, AKA …hope, that the autumn budget will contain something potentially increasing the value of their assets and therefore also in increasing the competition to acquire them.

"North Sea tax receipts plummet. The UK Government's decision to increase the windfall tax has resulted in a lower tax take from the North Sea, according to official figures published..."

https://www.agcc.co.uk/news-article/north-sea-tax-receipts-plummet-as-windfall-tax-hits-investment

“President Trump has made it clear that the United States will not accept any international environmental agreement that unduly or unfairly burdens the United States or harms the interests of the American people,”

https://www.offshore-energy.biz/us-rejects-imo-net-zero-framework-vows-retaliation-against-its-supporters/

https://www.offshore-energy.biz/aftermath-of-imos-net-zero-framework-historic-agreement-or-total-shipwreck/

I agree, Stevo. As well as the operational synergies and accelerated use of tax assets, a merged Serica/EnQuest would also have a more balanced product mix and geographical diversification. After the Autumn Budget, and even if nothing changes, the fiscal landscape will be clearer and this should unblock M&A activity. The EPL will not be removed, but there is reasoned speculation that oil and gas could be treated separately. Should this happen then it’s highly likely the EPL on oil would fall away by mid 2026. To note, tho, that given the different product mixes of Serica and EnQuest, a separation of oil and gas would disproportionately benefit EnQuest and its value.

Unlikely much will unblock before the Autumn budget. The EPL will not be removed. Maybe some info on the shape of a successor regime could be provided in the budget. The best to hope for is a split of oil and gas which, depending on the detail, for EnQuest could be close to as good as removing the EPL. Further patience needed.

Rachel Reeves latest statement may trigger deal activity but it feels more likely the Autumn budget, end Oct/early Nov, will be the real trigger.

The oil price has been below the ESIM (itself, artificially low as the 20 years of oil prices used to calculate it were not inflation-adjusted) for more than the last 2 quarters. Yet the EPL remains on all profits because both oil and gas prices must be below their ESIMs for 2 consecutive quarters for the EPL to fall away. Separating out oil and gas would have a big positive impact, especially for EnQuest with a UK revenue split of 86% oil to 14% gas, and would not mean removing the EPL or be noticed/understood by the public. Even without this change, EnQuest is well placed as long as it can pick up profitable producing assets for a fair price.

Reeves speaks of “fairness”, and splitting oil and gas now would certainly be fair, encourage investment, whilst not removing the EPL or causing the public to notice. And, if it was highlighted so they did, what is unfair about such a split. A strained analogy, but if due to a price spike a windfall was placed on… potatoes, would it be fair to place a windfall on revenue from all a farm’s products?

It feels this, an oil/gas split, is where the industry should be putting its focus. Not ideal, but it certainly would have a positive impact between now and 2030 (when, likely, Labour won’t be in the driving seat anyway).

Ron, I agree that here RR has shown she agrees with, or at least has fallen in line with, the zealotry of Starmer and Miliband.

RR probably sees no benefit for her in stimulating the NS as fiscal changes would likely not result in revenue benefits before the next election. Looks like she does not buy the threat/risk of job and supply chain losses. Maybe Equinor and Shell should slow Rosebank and Jackdaw or even decline to present an updated environmental impact assessment.

Companies under pressure to do deals but holding out for the Autumn Budget with hope of a change to the EPL could now re-think and accelerate inking deals?

continued…

“the labour party appear to have an ideological desire to sink the north sea with a fiscal regime that is clearly costing jobs and investment,” said snp westminster leader stephen *****, the mp for aberdeen south.

west aberdeenshire and kincardine mp andrew bowie, the tory shadow scottish secretary, said: “it’s shameful that rachel reeves is trying to pit the oil industry up against carbon capture in her attempt to play political games with the future of the north sea sector.”

the uk government insists carbon capture investment can protect 18,000 jobs in the north-east and create an additional 15,000.

Https://www.energyvoice.com/oilandgas/577644/chancellor-defies-aberdeen-critics-on-fair-oil-and-gas-windfall-tax/?utm_source=Sailthru&utm_medium=email&utm_campaign=Energy%20Voice%20-%20Lite%20Newsletter%20%5BA%5D%202025-08-04&utm_term=Energy%20Voice%20-%20Lite%20Newsletter%20%5BA%5D

Rachel Reeves claimed the windfall tax on North Sea oil and gas firms “remains fair” as she ignored growing calls from the sector to scrap it.

The Labour chancellor defended the levy – saying it’s right that companies who make big profits “pay a bit more”.

Ms Reeves believes the tax currently strikes the “right balance” and said it is crucial to help fund UK Government investment in the energy sector.

“I believe the windfall tax remains fair,” she told the Press and Journal.

“It is the same rate as the Norwegian tax, and there is a sunset clause so it finishes in 2030.

“I think that is the right balance.

“Energy prices are still very high compared to where they were a few years ago.

“I think it’s right we ask companies who have made big profits to pay a bit more.”

Major oil and gas firms currently pay a headline rate of 78% on profits.

Aberdeen and Grampian Chamber of Commerce (AGCC) led renewed calls for Ms Reeves to scrap the levy before her visit to the north-east.

In May, Harbour Energy blamed the effect of the windfall tax for its decision to axe 250 jobs in Aberdeen.

The chamber of commerce criticised Ms Reeves for standing by the tax.

Ryan Crighton, policy director, said: “If the chancellor wants North Sea oil and gas for decades to come, then we need the energy profits levy to be removed as soon as possible.

“Comparing the UK’s North Sea tax regime to Norway’s is misleading, because Norway offers fiscal stability, state investment, and generous incentives that the UK system simply doesn’t match.”

‘Money has to come from somewhere’

But Ms Reeves said Westminster investment in a carbon capture energy scheme at St Fergus showed how the levy is beneficial.

“If you look at things like the Acorn investment, that money has to come from somewhere,” she said.

“No industry wants more taxes, but also the industry benefits hugely from government investment.”

The chancellor spoke as she visited the St Fergus gas plant, just days after her boss, Sir Keir Starmer, was in Aberdeenshire to meet Donald Trump at the US President’s Balmedie estate.

The prime minister faced a backlash for prioritising the American leader having failed to visit the north-east since his election win last year.

But Ms Reeves defended the Labour chief.

“When he was leader of the opposition, he absolutely did go to Aberdeen,” she said.

“I’ve been in Scotland twice in two weeks.

“This is a government that’s committed.”

Ms Reeves was criticised for her determination to stick by the windfall tax, which was first introduced by the Tories in 2022.

“The Labour Party appear to have an ideological desire

Aim, that “praying” could well be what’s “blocking” things/deals. I assume the next milestone about a potential announcement of changes to the EPL is the Autumn budget. This same uncertainty hindered the deal with Serica. The TTT - Trump Tariffs Turmoil - sealed the deal abbandonement. It could resurface tho. Depends on the changes, but most likely EnQuest has more to gain than Serica from changes to the EPL, especially if as anticipated oil and gas are decoupled.

Sorry, I meant sells not buys.