North Sea sector confident Sunak will decide against windfall tax

North Sea energy companies believe they have a tacit agreement with UK ministers that if they increase investment Oil and gas fields They will be spared a ridiculous tax in the chancellor’s spring statement on Wednesday.

Shell announced last week that it did Re-submit approval plans Of the large gas field Jakdao in the North Sea, while leaving the possibility of reviving interest in the Cambo oil field opposite Shetland.

Chancellor Rishi Sonak is under heavy pressure from the Labor Party to impose a tax on the North Sea sector after rising energy prices Increase corporate profits, But he consistently rejected the idea, warning that it would reduce investment.

Government officials do not expect Sonak to levy an excessive tax on his spring statement, but the chancellor wants energy companies Sharpen investment sharply In oil, gas and renewable energy.

A senior North Sea official said Business Secretary Kwasi Quarteng, before Russia’s invasion of Ukraine, spoke of a “pairing of Kwak” with industry, which saved the sector heavier taxes in return for further investment.

“Now they are even more desperate for companies to invest,” the director said. Quartang opposes excessive tax, arguing that the UK needs energy companies to invest in them Reduce dependence on imported power.

Quartang’s allies insisted he was only referring to “pro quo pairing” in relation to granting search licenses to companies if they would agree to make their operations more environmentally friendly.

On Tuesday, a senior business official said he thinks the chancellor has decided not to tax the sector or raise taxes on the North Sea, but should show a “return”.

According to him, Sonak expected the companies to commit to increasing investments in new drilling and larger domestic production of oil to increase energy security. “I expect the two to be related,” he said.

Lord John Brown, CEO of BP for 12 years until 2007, makes life harder for Sonak, saying that excessive tax is “justified” because energy resources were state-owned and produced by licensed companies.

Shadow Chancellor Rachel Reeves is likely to overthrow Sonak if he fails to impose an excessive tax. Bernard Lonnie, CEO of BP, said last year that rising energy prices had turned his company into an “ATM”.

Prime Minister Boris Johnson met earlier this month with leaders of Britain’s oil and gas industry, during which he “reaffirmed his firm commitment” to the sector. Downing Street said it remains committed to a 2050 zero-carbon net target.

Shell signaled last December that it did Retreat from Cambo Field. At the time Britain was hosting the COP26 Climate Change Conference and the political mood turned sharply against fossil fuels.

But since then Crude oil prices have risen From less than $ 70 a barrel to more than $ 100, while the Russian invasion of Ukraine has rekindled interest in Britain becoming more independent in hydrocarbons.

Siccar Point Energy, Cambo’s leading partner, has applied to the UK’s oil and gas regulator to extend its license to cover the project, which is due to end in late March.

People familiar with the process described the license application as “formal” and said it was not necessary to say the oil project would definitely be renewed. The BBC reported that Shell is reconsidering its position.

Seker Point Energy, backed by private investment groups Blackstone and Belwater, put up the Cambo project last year after its junior partner in the program, Shell, said it no longer intends to make the investment needed to bring the reservoir into production. .

Siker Point Energy declined to comment. Shell said its position has remained unchanged since December, when it said the economic case for investing in the project was not strong enough, especially given the potential for delays in the event of political and social opposition.

North Sea sector confident Sunak will decide against windfall tax Source link North Sea sector confident Sunak will decide against windfall tax

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