Increased taxes and a block on new developments could push up imports instead.

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 Telegraph has the story.

The report looks at pledges set out by Ed Miliband, the shadow energy secretary, which include imposing a “proper windfall tax” that 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: “The Labour party currently has a healthy lead in the polls. But it will certainly come under pressure to define what it currently means by a “proper windfall tax”, a phrase often repeated throughout 2023. 

“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 returns on 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.

The latest government data shows that the UK still relies on oil and gas for 75pc of its total energy. The UK consumes 75bn cubic metres of gas a year (equating to the volume of 14 double decker buses per person) of which about 40pc of it from under its surrounding seas. 

It also consumes about 62m tonnes of oil and oil products a year, (just under a tonne per person) and produces about 35m tonnes from the North Sea and waters off Scotland.

Ross Dornan, markets intelligence manager at Offshore Energies UK, said: “Domestic resources supply about half our needs …it is crucial that we have the most attractive investment conditions as possible to make sure that domestic production is carefully managed otherwise our reliance on imports will accelerate.”

Read the full story here.