Rishi Sunak and Sir Keir Starmer are putting the offshore oil industry at risk and undermining Britain’s energy security, according to a leading oil and gas firm.
David Lattin, the chairman of Serica Energy, has been highly critical, saying that unpredictable taxes and political opposition have made the UK the most hostile environment he has ever worked in, outside of war zones.
Mr Lattin, who has more than 30 years of industry experience globally, said: “Except when I was in charge of a company with significant assets in a war zone, I have never faced a political situation that posed as great a challenge to investment decisions and planning for the future as in the UK. Nowadays”.
In his speech ahead of Serica’s annual meeting, Mr Lattin announced plans to shift investments outside of UK waters due to the ever-changing and burdensome tax and regulatory landscape. He highlighted the Conservative government’s introduction of the Windfall Gains Tax and its subsequent increase since spring 2022, which he claims has created ongoing uncertainty, severely damaging investor confidence.
To compound these issues, Labour has pledged to increase the tax and scrap the industry-specific investment allowance, a move that Mr Lattin warned would set a dangerous precedent by cutting off one sector from common business tax breaks. Oil and gas producers currently face a combined tax rate of 75%, far higher than for other industries in the UK.
“This is despite the passing of a period of so-called ‘surprise’ conditions for UK producers, with oil and gas prices returning to historically normal levels,” Mr Lattin noted. He criticized the Conservative Party for not proposing tax cuts and Labor for proposing an increase to 78%.
Mr. Latin emphasized the critical role hydrocarbons play in modern civilization and the continued reliance on them, saying: “It is surely better to produce these materials responsibly under world-leading regulatory oversight in this country, with all the benefits that this brings in jobs and tax revenues, than to import hydrocarbons that often come at a higher environmental and social cost than domestic production.”
He warned that current political policies would lead to reduced oil and gas production, leading to job losses, increased imports, higher overall emissions, lower tax revenues, and weakened national security. “The flow of oil and gas continues only when the main source of investment remains open. Without that, the flow dries up. Even existing oil and gas fields are deteriorating and need continuous investment to maintain production,” he said.
Additionally, Mr Lattin highlighted a recent High Court decision requiring planning authorities to take emissions into account when approving oil and gas fields, anticipating this would push the industry out of UK waters. He concluded: “The choice is not between UK oil and gas or no oil and gas; the choice is UK oil and gas or foreign oil and gas. As stated in the Supreme Court decision, emissions do not respect borders.
Serica Energy’s strong position underscores the urgent need for a balanced approach to energy policy, ensuring economic stability and energy security for the UK.