{"id":983239,"date":"2025-11-28T13:52:45","date_gmt":"2025-11-28T13:52:45","guid":{"rendered":"https:\/\/ukpostcode.org\/content\/?p=983239"},"modified":"2025-11-28T13:52:45","modified_gmt":"2025-11-28T13:52:45","slug":"uk-updates-licensing-framework-but-retains-the-windfall-tax","status":"publish","type":"post","link":"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/","title":{"rendered":"UK updates licensing framework but retains the windfall tax"},"content":{"rendered":"<p>&nbsp;<\/p>\n<hr \/>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_What_changed_%E2%80%94_the_licensing_framework\" title=\"\u00a0What changed \u2014 the licensing framework\">\u00a0What changed \u2014 the licensing framework<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_What_stayed_the_same_%E2%80%94_the_windfall_tax_and_overall_fiscal_regime\" title=\"\u00a0What stayed the same \u2014 the windfall tax and overall fiscal regime\">\u00a0What stayed the same \u2014 the windfall tax and overall fiscal regime<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_Why_the_governments_approach_matters_%E2%80%94_trade%E2%80%91offs_politics\" title=\"\u00a0Why the government\u2019s approach matters \u2014 trade\u2011offs &amp; politics\">\u00a0Why the government\u2019s approach matters \u2014 trade\u2011offs &amp; politics<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_What_comes_next_%E2%80%94_timeline_uncertainties\" title=\"\u00a0What comes next \u2014 timeline &amp; uncertainties\">\u00a0What comes next \u2014 timeline &amp; uncertainties<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_Quick_Summary\" title=\"\u00a0Quick Summary\">\u00a0Quick Summary<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_Case_Studies_Projected_Outcomes\" title=\"\u00a0Case Studies &amp; Projected Outcomes\">\u00a0Case Studies &amp; Projected Outcomes<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#%E2%80%A2_Potential_boost_from_%E2%80%9Ctie%E2%80%91back%E2%80%9D_developments\" title=\"\u2022 Potential boost from \u201ctie\u2011back\u201d developments\">\u2022 Potential boost from \u201ctie\u2011back\u201d developments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#%E2%80%A2_Risk_of_decline_continues_under_high%E2%80%91tax_regime\" title=\"\u2022 Risk of decline continues under high\u2011tax regime\">\u2022 Risk of decline continues under high\u2011tax regime<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_Reactions_Industry_vs_Government_vs_Environmental_Public_Interest\" title=\"\u00a0Reactions: Industry vs Government vs Environmental \/ Public Interest\">\u00a0Reactions: Industry vs Government vs Environmental \/ Public Interest<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_Industry_business_reaction_%E2%80%94_largely_negative_over_taxes\" title=\"\u00a0Industry &amp; business reaction \u2014 largely negative over taxes\">\u00a0Industry &amp; business reaction \u2014 largely negative over taxes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_Environmental_Green%E2%80%91policy_reaction_%E2%80%94_mixed_but_cautious\" title=\"\u00a0Environmental &amp; Green\u2011policy reaction \u2014 mixed, but cautious\">\u00a0Environmental &amp; Green\u2011policy reaction \u2014 mixed, but cautious<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_Government_perspective_%E2%80%94_a_balancing_act_of_energy_security_jobs_and_climate_commitments\" title=\"\u00a0Government perspective \u2014 a balancing act of energy security, jobs, and climate commitments\">\u00a0Government perspective \u2014 a balancing act of energy security, jobs, and climate commitments<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_Risks_Criticisms_What_Could_Go_Wrong\" title=\"\u00a0Risks, Criticisms &amp; What Could Go Wrong\">\u00a0Risks, Criticisms &amp; What Could Go Wrong<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/ukpostcode.org\/content\/uk-updates-licensing-framework-but-retains-the-windfall-tax\/#_What_This_Means_%E2%80%94_Scenarios_What_to_Watch\" title=\"\u00a0What This Means \u2014 Scenarios &amp; What to Watch\">\u00a0What This Means \u2014 Scenarios &amp; What to Watch<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"_What_changed_%E2%80%94_the_licensing_framework\"><\/span>\u00a0What changed \u2014 the licensing framework<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>The UK government has announced that it will <strong>allow new oil and gas production \u2014 but only on or near existing fields<\/strong>, or linked to existing infrastructure (so\u2011called \u201ctie\u2011backs\u201d or \u201ctransitional\u201d licences). (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes\" href=\"https:\/\/www.reuters.com\/business\/energy\/uk-government-allows-some-new-oil-gas-fields-holds-firm-taxes-2025-11-26\/?utm_source=chatgpt.com\">Reuters<\/a>)<\/li>\n<li>In other words: while the government still promises <strong>no new exploration licences<\/strong>, it is giving a \u201cconditional nod\u201d for some additional production capacity \u2014 a partial rollback of earlier commitments. (<a title=\"Ed Miliband confirms crackdown on North Sea exploration - but new drilling will continue\" href=\"https:\/\/www.theguardian.com\/business\/2025\/nov\/26\/ed-miliband-confirms-crackdown-on-new-north-sea-oil-and-gas-exploration?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li>The rationale seems to be that this compromise balances two goals: helping preserve energy supply (and jobs) while managing the shift toward lower\u2011carbon energy. (<a title=\"North Sea oil and gas groups given go-ahead for new drilling\" href=\"https:\/\/www.ft.com\/content\/ce022c59-1fd4-4bb8-a19e-6f3cda97a696?utm_source=chatgpt.com\">Financial Times<\/a>)<\/li>\n<\/ul>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"_What_stayed_the_same_%E2%80%94_the_windfall_tax_and_overall_fiscal_regime\"><\/span>\u00a0What stayed the same \u2014 the windfall tax and overall fiscal regime<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>The controversial windfall tax \u2014 formally the Energy Profits Levy (EPL) \u2014 remains in force. (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes\" href=\"https:\/\/www.reuters.com\/business\/energy\/uk-government-allows-some-new-oil-gas-fields-holds-firm-taxes-2025-11-26\/?utm_source=chatgpt.com\">Reuters<\/a>)<\/li>\n<li>Under the current rules, when oil and gas prices exceed certain government\u2011set thresholds, companies pay a <strong>38% windfall levy<\/strong>, pushing the <strong>total effective tax on profits to 78%<\/strong>. (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes\" href=\"https:\/\/www.reuters.com\/business\/energy\/uk-government-allows-some-new-oil-gas-fields-holds-firm-taxes-2025-11-26\/?utm_source=chatgpt.com\">Reuters<\/a>)<\/li>\n<li>The government has committed to keeping the EPL until <strong>March 2030<\/strong>, when it plans to replace it with a new mechanism \u2014 the Oil and Gas Price Mechanism (OGPM), which would impose a 35% surcharge if prices exceed certain thresholds. (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes\" href=\"https:\/\/www.reuters.com\/business\/energy\/uk-government-allows-some-new-oil-gas-fields-holds-firm-taxes-2025-11-26\/?utm_source=chatgpt.com\">Reuters<\/a>)<\/li>\n<\/ul>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"_Why_the_governments_approach_matters_%E2%80%94_trade%E2%80%91offs_politics\"><\/span>\u00a0Why the government\u2019s approach matters \u2014 trade\u2011offs &amp; politics<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>On one hand, allowing \u201ctie\u2011back\u201d production could <strong>extend the life of existing oil and gas infrastructure<\/strong>, provide a smoother transition for workers, and help ensure the UK doesn\u2019t face sudden energy shortfalls. (<a title=\"North Sea oil and gas groups given go-ahead for new drilling\" href=\"https:\/\/www.ft.com\/content\/ce022c59-1fd4-4bb8-a19e-6f3cda97a696?utm_source=chatgpt.com\">Financial Times<\/a>)<\/li>\n<li>On the other hand, the continuation of the windfall tax has triggered strong pushback from the industry. Many are warning that <strong>investment and hiring could collapse<\/strong> \u2014 a concern that could drive producers to scale back operations or shift focus away from the UK. (<a title=\"Oil and gas sector warns it will be 'taxed to death' after Rachel Reeves extends windfall tax\" href=\"https:\/\/www.scotsman.com\/news\/politics\/oil-and-gas-sector-warns-it-will-be-taxed-to-death-after-rachel-reeves-extends-windfall-tax-5419116?utm_source=chatgpt.com\">The Scotsman<\/a>)<\/li>\n<li>Some industry voices call the tax regime \u201cuncompetitive,\u201d suggesting that even more flexible licensing won\u2019t lead to meaningful investment without a lighter fiscal burden. (<a title=\"Empowering People in Oil and Gas\" href=\"https:\/\/www.rigzone.com\/oil\/news\/oeuk_says_uk_budget_delivers_bitter_blow_to_workers-27-nov-2025-182399-article\/?utm_source=chatgpt.com\">Rigzone<\/a>)<\/li>\n<\/ul>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"_What_comes_next_%E2%80%94_timeline_uncertainties\"><\/span>\u00a0What comes next \u2014 timeline &amp; uncertainties<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>The EPL remains in place through 2030. Unless the threshold prices that trigger the \u201chigh price\u201d levy are not met, companies will continue paying the windfall tax until then. (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes\" href=\"https:\/\/www.reuters.com\/business\/energy\/uk-government-allows-some-new-oil-gas-fields-holds-firm-taxes-2025-11-26\/?utm_source=chatgpt.com\">Reuters<\/a>)<\/li>\n<li>In March 2030, the plan is to shift to the OGPM \u2014 but the exact threshold, triggers, and design of the new mechanism remain subject to future policy decisions. (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes\" href=\"https:\/\/www.reuters.com\/business\/energy\/uk-government-allows-some-new-oil-gas-fields-holds-firm-taxes-2025-11-26\/?utm_source=chatgpt.com\">Reuters<\/a>)<\/li>\n<li>The government has also announced some support efforts \u2014 for instance a \u201cJobs Service\u201d meant to help workers in the sector as it transitions. (<a title=\"UK Budget: Government to permit more North Sea drilling while rejecting calls to end windfall tax - News - The Chemical Engineer\" href=\"https:\/\/www.thechemicalengineer.com\/news\/uk-budget-government-to-permit-more-north-sea-drilling-while-rejecting-calls-to-end-windfall-tax\/?utm_source=chatgpt.com\">The Chemical Engineer<\/a>)<\/li>\n<\/ul>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"_Quick_Summary\"><\/span>\u00a0Quick Summary<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>The UK has eased licensing restrictions: oil and gas firms can now get new production approval \u2014 but only via tie\u2011backs to existing fields.<\/li>\n<li>Despite that, the windfall tax remains, with a 38% levy plus other taxes bringing the total tax on profits to 78%.<\/li>\n<li>The tax stays until at least 2030, when it\u2019s supposed to be replaced with a new price\u2011linked tax mechanism.<\/li>\n<li>The mixed approach reflects a balancing act: the government wants to safeguard energy supply and jobs while keeping a strong fiscal return \u2014 but the approach has drawn criticism from both industry (for being too punitive) and from climate\u2011focused groups (for allowing more fossil\u2011fuel extraction).<\/li>\n<\/ul>\n<ul>\n<li>Here are some <strong>case studies, reactions and comments<\/strong> about the recent UK Government decision to update its oil &amp; gas licensing framework \u2014 allowing \u201ctie\u2011back\u201d production \u2014 while retaining the windfall tax (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes | MarketScreener UK\" href=\"https:\/\/uk.marketscreener.com\/news\/uk-government-allows-some-new-oil-gas-fields-but-holds-firm-on-taxes-ce7d5ed3d888f220?utm_source=chatgpt.com\">MarketScreener UK<\/a>). These illustrate how different actors see the trade\u2011offs and what could play out.<br \/>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"_Case_Studies_Projected_Outcomes\"><\/span>\u00a0Case Studies &amp; Projected Outcomes<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"%E2%80%A2_Potential_boost_from_%E2%80%9Ctie%E2%80%91back%E2%80%9D_developments\"><\/span>\u2022 Potential boost from \u201ctie\u2011back\u201d developments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Some analysts \u2014 including those at Wood Mackenzie \u2014 estimate that the \u201ctie\u2011back\u201d licences could unlock <strong>billions of barrels of economically viable reserves<\/strong>, helping extend the life of existing infrastructure in the North Sea basin. (<a title=\"North Sea oil and gas groups given go-ahead for new drilling\" href=\"https:\/\/www.ft.com\/content\/ce022c59-1fd4-4bb8-a19e-6f3cda97a696?utm_source=chatgpt.com\">Financial Times<\/a>)<\/li>\n<li>In theory, this could help the UK sustain domestic production longer, stabilising energy supply and helping avoid a steep drop in output. (<a title=\"UK government allows some new oil, gas fields, but holds firm on taxes - The Economic Times\" href=\"https:\/\/economictimes.indiatimes.com\/news\/international\/world-news\/uk-government-allows-some-new-oil-gas-fields-but-holds-firm-on-taxes\/articleshow\/125592669.cms?from=mdr&amp;utm_source=chatgpt.com\">The Economic Times<\/a>)<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"%E2%80%A2_Risk_of_decline_continues_under_high%E2%80%91tax_regime\"><\/span>\u2022 Risk of decline continues under high\u2011tax regime<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Despite the new licences, output from the North Sea has been falling for years: production dropped from peaks of ~4.4\u202fmillion boe\/d in the early 2000s to ~1\u202fmillion boe\/d in recent years \u2014 and long\u2011term estimates suggest a decline toward &lt;\u202f150,000 boe\/d by 2050. (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes | Forex News\" href=\"https:\/\/www.lse.co.uk\/fx\/news\/uk-government-allows-some-new-oil-gas-fields-but-holds-firm-on-taxes-f43rsqlpvhpmhe9.html?utm_source=chatgpt.com\">London South East<\/a>)<\/li>\n<li>With the windfall tax (the Energy Profits Levy \u2014 EPL) still in place, some projects may not be economically attractive enough to materialize, particularly in a mature basin with high production and decommissioning costs. (<a title=\"UK softens North Sea oil and gas tax hike, retaining capex allowance | S&amp;P Global\" href=\"https:\/\/www.spglobal.com\/commodity-insights\/en\/news-research\/latest-news\/crude-oil\/103024-uk-softens-north-sea-oil-and-gas-tax-hike-retaining-capex-allowance?utm_source=chatgpt.com\">S&amp;P Global<\/a>)<\/li>\n<\/ul>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"_Reactions_Industry_vs_Government_vs_Environmental_Public_Interest\"><\/span>\u00a0Reactions: Industry vs Government vs Environmental \/ Public Interest<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"_Industry_business_reaction_%E2%80%94_largely_negative_over_taxes\"><\/span>\u00a0Industry &amp; business reaction \u2014 largely negative over taxes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>The main industry lobby, Offshore Energies UK (OEUK), criticized the decision: their head, David Whitehouse, argued that \u201cthe future of North Sea energy depends on investment, which won\u2019t come without urgent reform of the windfall tax.\u201d According to him, \u201cif the levy stays beyond 2026, projects will stall and jobs will vanish, no matter how pragmatic licensing policy becomes.\u201d (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes | MarketScreener UK\" href=\"https:\/\/uk.marketscreener.com\/news\/uk-government-allows-some-new-oil-gas-fields-but-holds-firm-on-taxes-ce7d5ed3d888f220?utm_source=chatgpt.com\">MarketScreener UK<\/a>)<\/li>\n<li>Other producers \u2014 including major firms like one referred to as active in the North Sea \u2014 expressed disappointment that the windfall levy remains. Some had hoped for its early removal to justify new investment. (<a title=\"Britain eases opposition to new oil, gas permits, but holds firm on taxes | Offshore Magazine\" href=\"https:\/\/www.offshore-mag.com\/regional-reports\/north-sea-europe\/news\/55333129\/britain-eases-opposition-to-new-oil-gas-permits-but-holds-firm-on-taxes?utm_source=chatgpt.com\">Offshore Magazine<\/a>)<\/li>\n<li>Analysts from Wood\u202fMackenzie pointed out that while halting further tax hikes may be a concession, \u201cthe UK North Sea industry is still paying too high a tax rate when windfall profits no longer exist.\u201d Returns on investment remain far lower than comparable basins (e.g. in Norway), undermining competitiveness. (<a title=\"UK softens North Sea oil and gas tax hike, retaining capex allowance | S&amp;P Global\" href=\"https:\/\/www.spglobal.com\/commodity-insights\/en\/news-research\/latest-news\/crude-oil\/103024-uk-softens-north-sea-oil-and-gas-tax-hike-retaining-capex-allowance?utm_source=chatgpt.com\">S&amp;P Global<\/a>)<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"_Environmental_Green%E2%80%91policy_reaction_%E2%80%94_mixed_but_cautious\"><\/span>\u00a0Environmental &amp; Green\u2011policy reaction \u2014 mixed, but cautious<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Some environmental advocates welcomed the move to ban new exploration licences broadly, seeing tie\u2011backs as a compromise rather than enabling new large\u2011scale drilling. (<a title=\"Ed Miliband confirms crackdown on North Sea exploration - but new drilling will continue\" href=\"https:\/\/www.theguardian.com\/business\/2025\/nov\/26\/ed-miliband-confirms-crackdown-on-new-north-sea-oil-and-gas-exploration?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li>However, others said the concessions don\u2019t go far enough: for example, calls to push instead for renewal of renewables, carbon capture, and clean\u2011energy investment rather than prolonging fossil\u2011fuel extraction under high taxation. (<a title=\"North Sea plan allows drilling while enabling Labour to keep 'no new licences' pledge\" href=\"https:\/\/www.theguardian.com\/business\/2025\/nov\/26\/north-sea-plan-permits-new-drilling-existing-fields-no-big-shifts-clean-energy?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"_Government_perspective_%E2%80%94_a_balancing_act_of_energy_security_jobs_and_climate_commitments\"><\/span>\u00a0Government perspective \u2014 a balancing act of energy security, jobs, and climate commitments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>The government appears to view tie\u2011back licences as a pragmatic compromise: no \u201cnew exploration,\u201d but allowing some continued production \u2014 helping ensure energy security, protect jobs, and provide a smoother transition. (<a title=\"Ed Miliband confirms crackdown on North Sea exploration - but new drilling will continue\" href=\"https:\/\/www.theguardian.com\/business\/2025\/nov\/26\/ed-miliband-confirms-crackdown-on-new-north-sea-oil-and-gas-exploration?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li>Maintaining the EPL until 2030 gives fiscal certainty and ensures windfall revenues \u2014 arguably supporting public finances and perhaps funding green initiatives \u2014 while avoiding what it sees as new fossil\u2011fuel expansion. (<a title=\"Government announces plans to axe oil and gas windfall tax in 2030 | The Standard\" href=\"https:\/\/www.standard.co.uk\/business\/business-news\/government-announces-plans-to-axe-oil-and-gas-windfall-tax-in-2030-b1214905.html?utm_source=chatgpt.com\">The Standard<\/a>)<\/li>\n<\/ul>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"_Risks_Criticisms_What_Could_Go_Wrong\"><\/span>\u00a0Risks, Criticisms &amp; What Could Go Wrong<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><strong>Investment freeze \/ business exodus<\/strong>: With 78% tax on profits during high-price periods, many in the sector warn that the UK has become \u201cuncompetitive.\u201d That could lead firms to defer or cancel projects, or shift future investment elsewhere (e.g. overseas basins). (<a title=\"UK softens North Sea oil and gas tax hike, retaining capex allowance | S&amp;P Global\" href=\"https:\/\/www.spglobal.com\/commodity-insights\/en\/news-research\/latest-news\/crude-oil\/103024-uk-softens-north-sea-oil-and-gas-tax-hike-retaining-capex-allowance?utm_source=chatgpt.com\">S&amp;P Global<\/a>)<\/li>\n<li><strong>Shrinking workforce \/ job losses<\/strong>: OEUK previously estimated that windfall-tax-driven decline could put up to ~35,000 jobs at risk in the sector, as firms cut back operations or withdraw. (<a title=\"North Sea firms claim windfall tax risks 35,000 jobs and \u00a312bn in tax receipts | Oil and gas companies | The Guardian\" href=\"https:\/\/www.theguardian.com\/business\/article\/2024\/sep\/02\/north-sea-firms-windfall-tax-jobs-tax-receipts-risk?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<li><strong>Declining long\u2011term output regardless of new licences<\/strong>: Even with tie-backs, the structural decline of the North Sea \u2014 aging fields, rising decommissioning costs, fewer new large reservoirs \u2014 may mean output continues to drop, reducing overall energy self\u2011sufficiency and limiting economic gains. (<a title=\"Britain eases opposition to new oil, gas permits, holds firm on taxes | Forex News\" href=\"https:\/\/www.lse.co.uk\/fx\/news\/uk-government-allows-some-new-oil-gas-fields-but-holds-firm-on-taxes-f43rsqlpvhpmhe9.html?utm_source=chatgpt.com\">London South East<\/a>)<\/li>\n<li><strong>Mixed message politically \/ policy\u2011wise<\/strong>: The government is asking industry to accept high tax levels while hoping for investment \u2014 a combination many see as contradictory. That may undermine confidence among investors and long-term planning. (<a title=\"Ed Miliband confirms crackdown on North Sea exploration - but new drilling will continue\" href=\"https:\/\/www.theguardian.com\/business\/2025\/nov\/26\/ed-miliband-confirms-crackdown-on-new-north-sea-oil-and-gas-exploration?utm_source=chatgpt.com\">The Guardian<\/a>)<\/li>\n<\/ul>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"_What_This_Means_%E2%80%94_Scenarios_What_to_Watch\"><\/span>\u00a0What This Means \u2014 Scenarios &amp; What to Watch<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<thead>\n<tr>\n<th>Scenario<\/th>\n<th>Outcome<\/th>\n<th>What to Watch<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Optimistic<\/strong> \u2014 tie\u2011backs + tax revenue stable, moderate production maintained<\/td>\n<td>UK retains some domestic supply, jobs preserved; tax revenues help fund energy transition<\/td>\n<td>New tie-back developments materialize; gas\/oil prices high enough to justify investment<\/td>\n<\/tr>\n<tr>\n<td><strong>Pessimistic<\/strong> \u2014 high taxes deter investment, output declines continue<\/td>\n<td>Sharp drop in production, job losses, decline in tax revenues, more imports needed<\/td>\n<td>Firms withdraw or idle fields; decommissioning costs rise; skill drain in sector<\/td>\n<\/tr>\n<tr>\n<td><strong>Hybrid<\/strong> \u2014 sector shrinks, but clean\u2011energy investment accelerates<\/td>\n<td>Fossil industry contracts, but jobs and investment shift to renewables \/ CCS \/ hydrogen<\/td>\n<td>Strong transition policies; retraining\/reskilling for workers; investment in low\u2011carbon infrastructure<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>One key factor will be whether the future replacement tax mechanism (planned around 2030) offers enough clarity to reassure investors. (<a title=\"UK's new windfall tax mechanism faces critical trade-off between fairness and simplicity, warns Wood Mackenzie | Wood Mackenzie\" href=\"https:\/\/www.woodmac.com\/press-releases\/uks-new-windfall-tax-mechanism-faces-critical-trade-off-between-fairness-and-simplicity-warns-wood-mackenzie\/?utm_source=chatgpt.com\">Wood Mackenzie<\/a>)<\/p>\n<hr \/>\n<ul>\n<li><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; \u00a0What changed \u2014 the licensing framework The UK government has announced that it will allow new oil and gas production \u2014 but only on&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10,18],"tags":[],"class_list":["post-983239","post","type-post","status-publish","format-standard","hentry","category-gb-news","category-online-games"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>UK updates licensing framework but retains the windfall tax - UK News &amp; 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