Shell has said Rishi Sunak’s unexpected tax is a threat to North Sea oil and gas investment as Britain tries to increase its domestic energy supply.
The chancellor announced an “energy benefits tax” on oil and gas operators yesterday, hoping to raise £ 5bn to help fund a household support package.
Sunak also introduced measures to encourage investment in the UK’s energy supply, with tax breaks worth 91p for every £ 1 invested.
However, oil and gas experts have reacted with surprise because the one-time rate will remain in place until “normal” energy market conditions return or until the end of December 2025.
A Shell spokesman said: “We understand the concern of millions of people about how high energy costs are challenging their household budgets, and the need for support to help reach the end of the month.
“But at the same time, we need to keep investing to ensure the supply of oil and gas that the UK needs today, while at the same time allocating future spending to the low carbon energy we want to build for the future.
“However, in its current form, the rate creates uncertainty about the investment climate for North Sea oil and gas for the coming years.
“And in the longer term, the proposed tax breaks for investment do not extend to the renewable energy system that we want to drive in the UK and in which we invest very substantially. When we make plans for the next decade and beyond , we need certainty “.
Shell plans to invest £ 20 billion to £ 25 billion in the UK over the next decade, mainly in renewable energy projects.
Immediately following Sunak’s statement on Thursday, Shell had said that “the tax cut proposed by the chancellor on investments in the UK’s energy future is a critical principle in the new rate”. However, rival BP took a harder line. He said he would review his North Sea investment plans as the tax was not a one-time tax but a “multi-year proposal”.
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The debate over whether to tax some of the super profits generated by high oil and gas prices had sparked a split in the government, with Sunak pushing for the money, but Boris Johnson arguing it could hamper investment.
Sunak will use the funds to help pay for the cuts in household bills. Johnson is trying to encourage investment to increase domestic energy supply after the Russian invasion of Ukraine.
Shares of Shell were down 2% on Friday with BP up 1.8% and Harbor Energy, North Sea’s largest operator, down nearly 9%.