UK government allows some new oil, gas fields, but holds firm on taxes

Britain will allow new oil and gas production on or near to existing fields with some conditions, the government said on Wednesday, while dashing oil and gas producers' hopes for an early end to windfall taxes on their sector.

The Labour government had pledged during its 2024 election campaign that it would stop awarding new oil and gas licences.

Wednesday's move allows the government to hand out new oil and gas licences if they do not require new exploration and link back to existing fields and infrastructure, the Department for Energy Security and Net Zero said.


WINDFALL TAX TO REMAIN TO 2030

Presenting its budget on Wednesday, the government announced no changes to one of the world's toughest tax regimes for oil and gas producers that includes a windfall tax of 38%, bringing the overall tax burden to 78%.

While oil prices have fallen below a government-set threshold for the so-called Energy Profits Levy (EPL), gas prices have been above it. The windfall tax is disabled once both fall below their thresholds, which are regularly updated.

Also on Wednesday, the government said the EPL, which is due to end in March 2030, would be replaced with an Oil and Gas Price Mechanism at a rate of 35%, which would apply if oil and gas prices stay above certain thresholds.