A windfall tax could crimp investment in the UK’s energy system, said the chief executive of BP.
“By definition, windfall taxes are unpredictable –- and so would challenge investment in home-grown energy,” Bernard Looney said at the company’s annual general meeting in London.
“We know that from past experience for the whole of the North Sea sector and supply chain.”
Calls for a windfall tax have intensified following record earnings from oil and gas majors. While Prime Minister Boris Johnson hasn’t entirely ruled out the move, the government has been vocal about its desire for the industry to boost investment after the energy crisis triggered by Russia’s invasion of Ukraine.
BP announced last week that it would invest £18 billion in the UK over the next decade. Three-quarters of that will be directed at low-carbon sources of energy, while the rest will flow into its traditional oil and gas business.
Investment in the giant Clair field in the West of Shetland and Schiehallion, along with the Murlach, Kate and Mungo fields near the BP-operated ETAP hub in the Central North Sea are among the plans.
Looney said that the investments would happen regardless of whether a windfall tax is implemented.
Questions are again being raised on the prospect of a North Sea windfall tax after Chancellor Rishi Sunak said the option is still on the table if firms are shown not to be investing in the North Sea.
It’s not clear how the UK Government would impose such a tax, and which companies would be liable.
Last week Shell CEO Ben van Beurden said his firm’s planned investments of £20-25bn in the UK “have to make sense”, when asked whether a windfall tax could impact them.
Around 75% of the spending is earmarked for low or zero-carbon energies, which is a “very firm plan that we want to carry out,” Mr van Beurden said.
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