UK oil and gas supply chain companies have said government plans to increase windfall taxes on the sector could negatively impact investment in floating wind.
In an open letter to the treasury, issued by Offshore Energies UK (OEUK), over 40 member companies have warned official plans threaten £200bn of investment not just in oil and gas but also in offshore renewables and hydrogen.
The oil and gas industry has potential to spend almost £200bn over the decade, the majority in offshore wind, carbon capture and storage and hydrogen “in the right investment environment”, stated the open letter, whose signatories include Subsea7, Wood, OGC Energy and Xodus.
“To deliver net zero, there needs to be an unprecedented amount of private investment unlocked … We look at proposals to increase the EPL; extend its term; and reduce the rate of capital allowances with grave concern that these would be a blunt response which could undermine the levers to long term solutions and jeopardise jobs in communities across the UK,” it added.
The companies investing in nascent opportunities like floating offshore wind and CCS will require the cashflow from a stable and predictable oil and gas business to fund these opportunities, according to the signatories.
The open letter stated the role of the sector and its supply chain companies must be recognised with representation on the industrial strategy council and the supply chain task force.
“It is vital that the new government demonstrates actual commitment to working in partnership with the sector to secure continued investment and to deliver on promises to safeguard jobs,” it added.