6.750
%
Negative
12
mm boe
69
%
The announcement of the Finch ruling (20 June 2024) will come as a blow to the UK's participants, not because it materially changes anything that operators do at the planning stage, but because it is perceived to be yet another stick with which to beat the industry with. The issue now is that this underlines what many have believed, that there is open hostility to oil & gas, which can only adversely impact the sector as a whole. When this is combined with Labour's further EPL tax raid, and that its policy makers are no longer remotely interested in a balanced energy matrix, the outlook starts to look not just negative for UK oil & gas, but terminal. Given this, we increase our risk premia to 6.75% and maintain our Negative outlook.
June 20, 2024
Europe - North West
mm bbl
bcf
Western Europe island between the North Atlantic Ocean and the North Sea; northwest of France.
Concession
The fiscal regime that applies in the United Kingdom (UK) to the oil and gas industry consists of a combination of corporation tax, supplementary charge, petroleum revenue tax and the Energy Profits Levy, which currently has a March 2028 sunset clause.
The terms of the UK’s future relationship with the EU seem to be improving with the "Windsor Agreement," but just because there are rules, doesn't mean that the EU will follow them, so the jury is still out. UK legal, regulatory, and accounting systems are transparent and consistent with international standards. The UK legal system provides a high level of protection and private ownership is protected by law and monitored for competition-restricting behaviour.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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