Labour’s policies accelerating the North Sea oil and gas wind-down are expected to cost the UK Treasury around £13 billion in tax rebates and lost revenue by 2035, according to warnings from Brian Gilvary (former BP finance chief, now chairman of Ineos Energy).

Gilvary argues that high tax rates (an effective 78% levy on profits after Labour raised and extended the Energy Profits Levy) combined with restrictions/bans on new drilling have prompted operators to halt activity and decommission platforms and pipelines earlier than planned.

Decommissioning costs can be offset against prior years’ taxed profits, generating rebates (or reducing current/future tax payments). This brings forward liabilities while also cutting future tax receipts from ongoing production.

Rebates plus foregone tax ~£13bn between now and 2035. This aligns with North Sea Transition Authority (NSTA) data showing annual decommissioning spend rising from ~£2bn in 2024 to ~£3bn per year through at least 2030, with ~£28bn total decommissioning spend forecast from now to 2035.

Remaining decommissioning costs from 2025 onward around £44bn (2024 prices).

HMRC-linked projections have put the Exchequer cost of related tax relief (repayments + reduced offshore corporation tax) in the region of £11–12bn in recent official figures, though accelerated timing raises near-term pressure.

Longer-term or higher estimates (including older National Audit Office figures) have pointed to substantially larger totals in some scenarios.

Related earlier warnings (including from Gilvary) cited figures in the £10–11bn range for taxpayer exposure on the £44bn cost base, with roughly half as direct rebates.

This follows BP’s recent plans to exit its North Sea operations (its CEO noted the region “doesn’t compete for capital”).

Gilvary has described the decline as eroding long-term national wealth, damaging supply chains and skilled jobs (especially in Scotland and the North East), and reducing the fiscal capacity to fund public services and the energy transition.

He contrasts this with higher investment levels in the Norwegian sector of the same basin.

Decommissioning tax relief is a longstanding feature of the UK fiscal regime for oil and gas (companies can carry back losses against past profits under ring-fence corporation tax and related rules; Petroleum Revenue Tax reliefs also apply in some cases).

Decommissioning Relief Deeds provide additional certainty on minimum relief levels.

Official estimates of the Exchequer liability have varied with cost forecasts, oil/gas prices, production levels, and discount rates. Acceleration due to policy is the core of the recent criticism.

The story originates primarily from The Telegraph (7 August 2026 reporting on Gilvary’s comments) and has been covered by outlets such as the Daily Sceptic.

It builds on earlier analyses of how the Energy Profits Levy, investment restrictions, and the shift toward net zero have sped up field closures relative to previous expectations.

UK vs Norway North Sea (UKCS vs NCS): A Tale of Two Sectors

The UK Continental Shelf (UKCS) and Norwegian Continental Shelf (NCS) share the same geological basin but have diverged sharply in recent years due to differences in policy, fiscal regimes, licensing, and political approach.

Norway treats oil and gas as a long-term national asset with stable, investment-friendly rules; the UK has imposed high and frequently changing taxes, restricted new exploration, and accelerated managed decline.

Production

Norway: Much higher and more stable. In 2025, NCS total petroleum production reached high levels (around 239 million Sm³ o.e., one of the strongest years since 2009). Oil/liquids often exceed 2 million bpd in monthly figures (e.g., ~2.2 million bpd liquids in early 2026). Overall output is roughly 3–4 times the UK’s. Production is expected to hold relatively steady into the early 2030s before gradual decline.

UK: In long-term decline. Peaked at ~4.5 million boe/d in 1999; recent figures around 1.0–1.1 million boe/d (2024–2025), with NSTA projections falling to ~0.9 million in 2026 and under 0.7 million by 2029–2030. Oil production has roughly halved in five years in some measures.

Norway produces the large majority of North Sea oil and gas; the UK share continues to shrink.

Investment (Capex)

Norway: Strong and sustained. Upstream investment was ~$24bn in 2025 (up from ~$21bn in 2015). NCS investments remain high (hundreds of billions of NOK annually; e.g., ~NOK 250–270bn range in recent forecasts). Greenfield/development investment expected at ~$43bn cumulative to 2030.

UK: Sharp drop. From ~$18.8bn in 2015 to ~$5.5bn in 2025. Further declines projected (some forecasts under $3.5–5bn near-term). Cumulative development investment to 2030 only ~$11bn.

Norway’s spending is several times higher; the gap is widening.

Exploration & Licensing

Norway: Active and predictable. 33 exploration wells completed in 2025; 40+ planned for 2026. Regular Awards in Predefined Areas (APA) rounds (dozens of licences awarded annually, e.g., 53–57 recently). Significant discoveries (2.62 billion BOE from 2016–2025).

UK: Near-standstill. Zero exploration wells spudded in 2025 (first time since 1960); only a handful planned for 2026. Licensing rounds infrequent and delayed; ban/restrictions on new exploration under current policy. Far fewer discoveries (370 million BOE over the same decade).

Fiscal Regime (Tax)

Both have high headline marginal rates around 78%, but the systems differ fundamentally:

Norway: Stable since 1992. High rate offset by generous, predictable reliefs — including ~72% cash refund on exploration losses (and strong deductions for development/decommissioning). Government shares risk; companies get timely refunds. Cross-party consensus supports the framework.

UK: Unstable and punitive in practice. Ring-fence CT (30%) + Supplementary Charge (10%) + Energy Profits Levy (38%, extended to 2030) = 78%. Frequent changes since 2022, investment allowances largely removed, limited decommissioning relief under EPL. Creates high uncertainty and discourages new capital.

Norway’s “high tax + high relief + stability” model attracts investment; the UK’s combination of high tax + instability + exploration limits drives exits and accelerated decommissioning.

Broader Outcomes & Policy

Norway: “Develop, not dismantle.” Maintains production for energy security (major European gas supplier), funds the sovereign wealth fund (>$2 trillion), supports jobs and the energy transition. Continues new projects and even reactivates older fields.

UK: Managed decline toward net zero. High taxes and no new licences accelerate field closures, raise near-term decommissioning costs (and associated tax relief claims on the Treasury), reduce domestic supply, and increase import dependence (much of it from Norway). Jobs, supply chain, and tax revenues are declining faster.

Same rocks, opposite trajectories.

Norway maximises recovery and value with policy certainty and risk-sharing.

The UK’s approach has led to collapsing investment, faster production decline, and rising costs of early shutdowns.

Industry analyses (OEUK, Westwood, Wood Mackenzie, etc.) consistently highlight this policy-driven divergence.