A leading oil and gas producer has warned of an investment ‘hiatus’ in the North Sea after Labour’s assault on the industry sent it plunging into the red.
Ithaca Energy posted losses of £63million for 2025 – having made a profit of £115million the previous year – after it took a £245million hit from the extension of the windfall tax to 2030.
The company also warned that ‘continued fiscal and regulatory uncertainty’ over Labour’s plans for the North Sea ‘placed the sector into a holding pattern throughout the year’.
It said this contributed to ‘a continued hiatus of material long-term investment activity across the sector’.
Ithaca shares fell nearly 9 per cent in early trading.
North Sea producers pay 78% tax on oil and gas profits
The update came as the war in the Middle East sends oil and gas prices soaring – sparking a fresh debate over drilling in the North Sea.
Brent crude has soared from around $70 a barrel before the US-Israeli attacks on Iran to $105 today. It hit $119.50 a barrel last week.
Last year was the first since 1964 that no new wells were drilled in the British North Sea – with the industry blaming the windfall tax on profits and Ed Miliband’s ban on licences for exploration in new areas.
The windfall tax – or so-called Energy Profits Levy – was introduced by the last Conservative government in 2022 as prices soared in the wake of Russia’s invasion of Ukraine.
The 25 per cent levy was raised to 35 per cent in November 2022 and then to 38 per cent by Labour.
That took the headline tax rate on oil and gas profits to 78 per cent – among the highest in the world.
Labour also extended its duration to March 2030 despite warnings that it is hitting investment and jobs.
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