Britain’s biggest North Sea oil company sees tax windfalls hit investment

The UK government’s plan to further increase the one-off levy on North Sea oil and gas producers will drive investment away from the region, while Britain still needs oil and gas for the foreseeable future, Harbor Energy’s chief executive has said , the largest UKCS producer. Financial Times.

The Labor Party, which swept to power in Britain after a landslide victory in July’s general election, said in July it planned to raise the Energy Profit Tax (EPL) rate to 38% from November 1, 2024, from 35% now, bringing the top tax rate on upstream oil and gas activities to 78%, up from 75% currently. The tax will be further extended by one year until 2030.

Harbor Energy CEO Linda Cook has criticized the tax since it was first introduced by the previous UK government in 2022.

Now Cook has told the FT that an increase in the stamp duty would further raise the barrier to attracting investment to the UK.

“The tax regime in many other countries – in all the other countries – where we will have a presence will be more attractive” than the UK North Sea, she added.

Earlier this week UK offshore industry group OEUK warned that not only would viable capital investment be cut from $18.5bn (£14.1bn) to just $3bn (2, £3bn) between 2025 and 2029, but the tax increase will also result in $16bn (£12bn) less tax revenue for the country compared to the current tax regime.

Last week, Equinor, the operator of one of the major new developments in recent years, Rosebank, said it was awaiting clarity on the UK tax regime from the Labor government before strategizing and committing to investment in the UK’s North Sea United.

As a result of the planned increase in the one-off duty, UK North Sea producers have already warned that they are considering moving to more fiscally stable jurisdictions such as Norway.

Neo Energy said this week it was slowing investment in light of “fiscal and regulatory uncertainty”.

By Tsvetana Paraskova for Oilprice.com

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