UK Energy Profits Levy highlights dangerous consequences of proposed Australia gas exports tax

Hundreds of UK oil and gas jobs are being shed every week, domestic production is declining and exploration activity has stopped, pushing the UK into energy insecurity and providing a real-world example of the risks posed by a proposed new tax on Australian LNG exports. 

Chamber of Minerals and Energy WA (CME) Chief Executive Officer Aaron Morey said the consequences of the British Government’s Energy Profits Levy, a windfall tax on oil and gas producers introduced in May 2022, should serve as a cautionary tale for Australia. 

“Since the UK Energy Profits Levy was introduced, investment in the British oil and gas industry has crashed, with capital and projects being deferred or redirected elsewhere,” Mr Morey said. 

“At the same time Britain is becoming increasingly reliant on imported gas, not a single exploration well was drilled in UK waters last year for the first time since 1964. 

“An estimated £50 billion of potential oil and gas investment is not proceeding and thousands of well-paying jobs on the oil and gas industry are expected to disappear over the next decade. 

“In the midst of a global energy crunch, for Australia to go down the UK route would be an own goal of epic proportions. It would put us on a path to economic ineptitude.” 

Mr Morey said the key lesson from the unfolding Middle East conflict was that countries needed to foster, encourage and attract investment into domestic energy production. 

“In addition to shielding families and businesses from spikes in international gas prices, Australia’s LNG industry is proving to be a significant source of leverage in international negotiations,” Mr Morey said. 

“You only need to look at the Singapore–Australia agreement, which is clearly centred around our LNG supply. That’s helping to ensure flows of petrol and other refined products into Australia, shielding families and households from even further pain.” 

Mr Morey said Australia’s longstanding reputation as a stable and reliable destination for international resources investment was one of its most powerful remaining drawcards. 

“Introducing a new tax on gas exports or further increases to the PRRT would seriously harm our standing in the eyes of global investors, stripping away one of our last remaining competitive advantages 

“There are significant opportunities to invest in hydrocarbons around the world and capital will flow to where it’s welcomed. 

“We’re at a very dangerous point here. Introducing higher taxes in the current environment would be an incredible act of self-harm. We cannot be clearer: this is not a path Australia should go down.” 

BACKGROUND 

• The Energy Profits Levy – the UK’s windfall tax on oil and gas producers – was introduced in May 2022 and applies to profits arising on or after that date. 

• Offshore Energies UK (OEUK) estimates that up to £50 billion of potential oil and gas investment is not proceeding under current EPL settings. 

• Analysis by Robert Gordon University forecasts UK oil and gas employment will fall from around 115,000 in 2024 to between 57,000 and 71,000 by the early 2030s. 

• Zero exploration wells were drilled in UK waters in 2025 for the first time since 1964.