Aberdeen Crumbles Under UK’s Windfall Energy Tax

Core Insights - Aberdeen, the oil capital of Europe, has faced multiple downturns since the 2015-2016 price crash, exacerbated by the pandemic and the Ukraine war, leading to a significant tax burden on oil and gas firms [1][4] Industry Overview - The oil and gas sector in Aberdeen and Aberdeenshire has been losing jobs since the 2010s, with increasing pessimism among companies as the region's fortunes are closely linked to the energy sector's performance [2] - The UK government aims for a Just Transition for North Sea workers, but many skilled workers are leaving the energy sector or relocating to lower-tax regions, impacting the local workforce [3] Regulatory Environment - The introduction of the Energy Profits Levy (EPL) has led to calls from oil and gas companies for regulatory certainty, as rising taxes and policy changes have deterred investment in the North Sea [4][6] - The Labour government has removed the 29% investment allowance for oil and gas operations, further hindering investment in the North Sea [5] - The main offshore energy industries association, OEUK, highlights that frequent changes in the tax regime and plans to ban new field development are significant barriers to increasing domestic oil and gas production [6] Future Outlook - The UK government is consulting on the future tax regime and is urged to replace the windfall tax promptly to prevent further decline in the oil and gas industry [7]