Group 1 - The UK government has decided to approve new oil and gas production in the North Sea, allowing output from existing fields and nearby areas, while maintaining the windfall tax until 2030 [1] - The energy industry has expressed concerns that the windfall tax will deter investment in domestic energy supply, which is crucial for reducing reliance on imports and addressing high electricity prices [2][3] - Offshore Energies UK's chief has emphasized that the future of North Sea energy relies on investment, which is unlikely to occur without reform of the windfall tax, warning that projects may stall and jobs could be lost if the tax remains beyond 2026 [3] Group 2 - Since the introduction of the Energy Profits Levy (EPL) in 2022, oil and gas companies have sought regulatory and tax certainty, but recent policy changes and increased taxes have led to a decline in North Sea investments [4] - The Labour government's increase of the windfall tax and removal of the 29% investment allowance has resulted in a significant drop in production and exploration drilling, with UK oil and gas production decreasing from approximately 4.4 million barrels of oil equivalent daily 25 years ago to about 1 million barrels daily currently, projected to fall to as low as 150,000 barrels by 2050 [5]

Government Policy - The UK government will maintain a controversial windfall tax on North Sea oil and gas producers until the end of the decade [1]

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]

UK bank shares slumped after Chancellor Rachel Reeves faced renewed calls to raise revenue by imposing a windfall tax on lenders https://t.co/jz9vA0Tc4t ...

UK Chancellor of the Exchequer Rachel Reeves could raise billions of pounds of revenue by imposing a windfall tax on commercial lenders to recover the profits they are making from taxpayers on deposits held at the Bank of England https://t.co/ZRxu3VthXV ...

Government Policy - Italy's deputy PM opposes windfall taxes on banks [1] - The windfall tax issue has caused division within the Italian government led by Giorgia Meloni [1]