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Thursday, Jul 18, 2024

Shell says windfall tax 'creates uncertainty' about North Sea oil and gas investment

Shell says windfall tax 'creates uncertainty' about North Sea oil and gas investment

The measure will see oil and gas firms pay a 25% levy on profits - but get tax breaks worth 91p for every £1 invested, according to the Treasury.

Shell has said the chancellor's windfall tax "creates uncertainty" about investing in oil and gas in the North Sea.

The tax was announced by Rishi Sunak as part of a £21bn support package aimed at helping people cope with the rising cost of living.

The measure will see oil and gas firms pay a 25% levy on profits - but get tax breaks worth 91p for every £1 invested, according to the Treasury.

A Shell spokesperson said the company understands the "worry for millions of people about how high energy costs are challenging their household budgets" and the need for support "to help make ends meet".

"But at the same time, we must sustain investment in securing supplies of oil and gas the UK needs today, while allocating future spend for the low carbon energies we want to build for the future," they continued.

"However, in its current form the levy creates uncertainty about the investment climate for North Sea oil and gas for the coming years.

"And, longer term, the proposed tax reliefs for investment don't extend to the renewable energy system we want to drive forward in the UK and invest in very substantially.

"When making plans for the next decade and beyond, we need certainty."

The new windfall tax includes an investment allowance to incentivise oil and gas firms to invest in "UK extraction", according to the Treasury.

Companies can already claim tax relief on what they invest, but the government said a new investment allowance will double what they were getting before.

The new allowance, which will give firms 80% off the windfall tax, will be provided at the point of investment, which the government said is more immediate than reliefs that are currently in place.

Yesterday BP signalled that the tax was harsher than expected, saying the announcement is "not a one-off tax" but a "multi-year proposal".

The company said it will "now need to look at the impact of both the new levy and the tax relief on our North Sea investment plans".

The tax is expected to raise £5bn for the Treasury and Mr Sunak said it would be phased out when energy prices return to more normal levels.

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