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UK Oil Industry on Edge as Labour Wins Election in a Landslide

The Labour Party won the UK election in a landslide, as Britons overwhelmingly voted on Thursday to end 14 years of Conservative rule.

Exit polls and the first official results showed early on Friday that the Labour Party won more than 400 seats in Parliament, while the Tories lost more than 200 seats and slumped to about 120, the worst election showing since World War II.   

The resounding Labour victory is a concern for the UK oil and gas industry, as the new government could follow up on Labour’s campaign pledges to further raise the already high windfall tax on oil and gas profits in the North Sea and scrap tax relief for operators for part of the investments in oil and gas assets they have made.

Operators in the UK North Sea are consolidating operations in view of the tax regime in the UKCS, where the Conservatives introduced a windfall tax in 2022. Earlier this year, the tax was extended by a year to March 2029.

On the eve of the election, David Whitehouse, CEO of the leading trade body Offshore Energies UK (OEUK), said: “The incoming government must listen to energy industry concerns about the UK’s fiscal regime and licenses for domestic oil and gas production if it is to deliver a successful energy transition.”

“Details matter. Labour Party policies, poorly managed and delivered without industry input, could spell chaos for employment in this industry at a time when there are already concerns about the economy,” Whitehouse added.

The Labour leadership must deliver on its assurances to engage with industry on how to manage the UK’s energy transition, he noted.

Last month, OEUK’s Whitehouse commented on the Labour Party manifesto, saying that “We’re concerned by proposals to end new oil and gas licences in UK waters.”

“We are explaining to all parties that we need the churn of new licences for a successful homegrown energy transition, to safeguard jobs and our energy security and create the investment conditions firms need to stay here in the UK.”  

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on July 05 2024 said:
    A labour government has no alternative but to encourage investments in the remaining oil and gas resources in the North Sea if it is to prevent the UK economy from sliding back towards recession as a result of rising imports of oil and gas thus widening the budget deficit.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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