Plans to ease restrictions on new oil and gas drilling in the North Sea will be unveiled on Wednesday as part of the government's North Sea Strategy.
Chancellor Rachel Reeves will announce the strategy in the Budget, the BBC understands. The Department of Energy Security and Net Zero will release a document to this effect shortly thereafter.
The strategy is expected to contain a more liberal interpretation of the manifesto promise to ban new oil and gas exploration, with more generous expansions of existing fields.
The idea of allowing new drilling in a way that could be linked to existing fields was first floated at the Labor Party conference in September.
The results of the North Sea review will not directly link to the decision being considered by ministers on whether to give the go-ahead to the controversial Rosebank field, which Ed Miliband has openly opposed while in opposition.
This project is the subject of separate and ongoing regulatory and litigation proceedings. However, it is widely believed that a wider relaxation of the rules will improve Rosebank's chances of eventually winning approval.
Mounts have historically been used for small, remote expansions of existing oil and gas fields that geologically extend into currently unlicensed areas of the seafloor.
Rosebank is a much larger enterprise and requires its own production infrastructure.
There has also been speculation that the 78% windfall tax, set to expire in 2030, could be eliminated earlier.
In recent months, the oil and gas industry has been lobbying hard for changes to the windfall tax, or energy profits tax, which they say is hurting the industry.
Investment is at an all-time low and operators are instead looking to spend their money in parts of the world that have better tax rates.
Research from Robert Gordon University in Aberdeen shows that around 1,000 jobs a month are currently being lost.
It is clear that the green light to the “tying backs” will be seen as an empty gesture without any concessions in the field of taxation.
The most likely move by the government would seem to be some sort of “cap and floor” mechanism that would kick in if oil prices return to high levels, as they did after the Russian invasion of Ukraine.
Industry officials argue that subsequent falls in crude oil prices demonstrate that the windfall has ended and that taxation should reflect that change.
Aberdeen and Grampian Chamber of Commerce chief executive Russell Borthwick has criticized the UK government, saying its North Sea policy is “completely wrong”.
“This is the first step towards undoing the damage that has already been done, but while the energy profits tax remains in place, this change alone will not stop the loss of jobs and investment in our oil and gas industry,” he said.
Mr Borthwick said maintaining the EPL would “guarantee that thousands of jobs will disappear”.
He predicted more companies would leave the North Sea.
“The Chancellor must signal a move away from this tax today and that shift must happen in 2026 before it is too late,” he added.
