North Sea oil future ‘threatened by Labour’

THREE quarters of all the North Sea’s new oil and gas projects would be rendered economically unviable under Labour’s tax proposals, industry chiefs have warned.

A combination of the existing windfall tax and uncertainty over a Labour government’s policies could mean “sanctioned investment across the North Sea will fall to levels not seen since the 2016 and 2020 downturns during 2024”, according to a report by analysts Wood Mackenzie. The report looks at pledges set out by Ed Miliband, the shadow energy secretary, which include imposing a “proper windfall tax” which would raise the current levy by further 3pc. This would mean UK oil and gas producers would pay a total of 78pc tax on any profits.

Mr Miliband has also said a Labour government would backdate the windfall tax, halt tax breaks on new investment and halt licensing for further exploration and drilling.

The report said: “Our analysis shows that only a quarter of all new projects in the North Sea would be economically viable under Labour’s earlier proposals. Many operators may wait and see, unless they are confident that investment can withstand further shocks.”

It comes after the Government opened up 74 areas of the UK’s North Sea and Atlantic waters for new drilling on Wednesday.

A Labour spokesman said: “Labour will ensure a balanced transition in the North Sea – using oil and gas for decades to come, and not issuing licences to explore new fields as we accelerate to clean power, with a resolute focus on cutting bills for families.”