Authored by Tsvetana Paraskova by way of OilPrice.com,
The UK authorities’s plan to additional elevate the windfall tax on North Sea oil and fuel producers will drive investments away from the area whereas Britain nonetheless wants oil and fuel for the foreseeable future, the chief government of Harbour Vitality, the biggest UKCS producer, advised the Monetary Instances.
The Labour Occasion, which got here to energy within the UK after a landslide victory within the July common election, stated in July that it intends to boost the speed of the Vitality Earnings Levy (EPL) to 38% from 1 November 2024, from 35% now, bringing the headline charge of tax on upstream oil and fuel actions to 78%, up from 75% presently. The levy will probably be additional prolonged by a yr to 2030.
Harbour Vitality’s CEO Linda Cook dinner has criticized the levy ever because it was first launched by the earlier UK authorities in 2022.
Now Cook dinner advised FT {that a} rise within the windfall tax would carry the barrier to draw funding within the UK even increased.
“The fiscal regime in a variety of the opposite international locations — in all the different international locations — through which we could have a presence will probably be extra engaging” than the UK North Sea, she added.
Earlier this week, UK offshore trade group OEUK warned that not solely viable capital funding could be decreased from $18.5 billion (£14.1 billion) to only $3 billion (£2.3 billion) within the interval 2025 to 2029, however the tax hike would additionally result in $16 billion (£12 billion) decrease tax receipts for the nation in comparison with the present tax regime.
Final week, Equinor, the operator of one of many main new discipline developments lately, Rosebank, stated it awaits readability on the UK tax regime by the Labour authorities earlier than strategizing and committing to investments within the UK North Sea.
Because of the deliberate hike within the windfall tax, UK North Sea producers have already warned they’re contemplating shifting to extra fiscally secure jurisdictions resembling Norway.
Neo Vitality stated this week it was slowing down funding in mild of “fiscal and regulatory uncertainty”.
