Oil firms slash investments in UK as govt announces new taxes
Multiple leading international oil and gas firms have announced cuts in proposed investments in North Sea as the government of the United Kingdom raised taxes on profits.
A statement from WorldPR Group said that French oil giant, TotalEnergies disclosed it will be cutting investment because of the tax. “French oil giant TotalEnergies, at £134bn the second largest North Sea oil operator, is the first major to cut investment as a direct result of the windfall tax, said WorldPR Group chairman, Patrick Robertson. “Pulling 25% of previously planned investment worth about £100m, it has axed its Elgin gas field 200 kilometres east of Aberdeen.”
Shell has also reportedly reviewed plans to invest £25bn into the UK’s energy system ranging from renewables to oil and gas projects. Norway’s Equinor also stated that it will take a decision on whether to proceed with its planned £8bn Rosebank project, which could amount to 8% of the UK’s oil production between 2026 and 2030.
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Robertson claimed the windfall tax on North Sea oil and gas profits was a “political moneygrab to relieve majors of excess profits” and allow the government give more money to households to sustain in the cost-of-living crisis. “The reality is a fairly self-evident own-goal, as the energy majors now perceive little benefit in making long term, expensive investments in the North Sea in an already challenging, cyclical environment if the reward for making a profit is to get clubbed over the head with a heavy, new and completely opportunistic Government tax. And who could possibly disagree with them?”
He noted that oil and gas supplied 75% of Britain’s total energy in 2021, including 40% of its gas and totalled 40% of its electricity generation. Adding that though UK gas imports were on the rise, the government policy would worsen shortage by crushing domestic production as 2,100 North Sea wells would be decommissioned by 2032. “Meanwhile, there is literally zero chance of plugging the ever-widening supply gap with any other form of domestically produced energy – whether wind, solar, hydro-electric, geothermal or nuclear,” Robertson explained. He concluded that the imported high energy pries would linger as the government was driving electrification of vehicles without coherent plan for supply.
