The North Sea drilling industry has cautioned that UK renewables projects' viability is in jeopardy unless the government revises its policies regarding windfall taxes and day rates. The Chairman of the North Sea chapter of the International Association of Drilling Contractors (IADC), Darren Sutherland, stated that challenging market conditions are prompting rig operators to leave for regions offering better rates and longer-duration contracts, such as Australia. He emphasized that the drilling industry is capital-intensive, with stakeholders requiring financial satisfaction.

The North Sea rig market has witnessed a 10% increase in the UK Energy Profits Levy (EPL) since November 2022, which has led rig operators to seek better prospects overseas, resulting in a 40% leaner market compared to 2017, according to analysis by Westwood Global Energy Group.

Sutherland emphasized the vital role of the drilling industry in renewables, including offshore wind, gas, and carbon capture and storage (CCS). A report by Offshore Energy UK (OEUK) suggested that a significant portion of offshore wind and CCS activities would depend on supply chain capabilities serving the oil and gas sector by 2030. Restrictive government policies related to oil and gas licensing and development activities could jeopardize the expansion of low-carbon energy in the UK, as per the OEUK report.

Sutherland expressed concern that the UK government's efforts to address these issues may be too little, too late, and urged for a longer-term vision with a stable fiscal regime to make the North Sea an attractive investment destination.

He warned that rigs leaving the North Sea could lead to a tightening market, rising costs, and the economic unviability of previously viable projects.