The UK’s main lobby group for the oil and gas industry urged ministers to work with the sector to minimize the the impact of a new windfall tax on profits.
The energy-profits levy, which was passed into law on Wednesday, risks starving the North Sea of tens of billions of pounds of investment, Offshore Energies UK warned.
The government announced the tax on oil and gas profits in May as a way to fund support for Britons hit by soaring inflation and energy bills. The levy, which is expected to raise £5 billion ($5.9 billion) of additional taxes, increases taxation from to 65% from 40% previously.
“Exploring for oil and gas and then bringing it to shore is inherently a risky and expensive business, so our members need the UK’s fiscal rules and other regulations to be stable and predictable before they consider investing the hundreds of millions of pounds needed for such projects,” OEUK head Deirdre Michie said in a statement.
The tax has drawn the ire of independent oil and gas producers who say it disproportionately affects smaller firms compared with major producers such as BP and Shell.
But even larger firms have shown their discontent, with BP saying it will review the impact of its £18 billion spending plans in the UK because of the tax. Speaking at a conference on Thursday, Shell Chief Executive Officer Ben van Beurden said it was “inevitable” that the industry would invest less in oil and gas because of the tax.
Recommended for you
