Offshore staff
LONDON – INEOS chairman Sir Jim Ratcliffe has criticized the UK government’s windfall tax on North Sea E&P companies, claiming the decision imperils investment across the basin.
The company operates the Forties Pipeline System (FPS) in the UK central North Sea, which transports 575,000 bbl/d of oil from 85 offshore fields over 169 km to the Kinneil processing complex in Grangemouth, central Scotland. In 2020 the system transported more than 30% of the UK’s total offshore oil production to the mainland.
Last year the government introduced and subsequently increased the windfall tax on North Sea profits. Ratcliffe pointed out that the UK now imposes three taxes on operators: a 30% corporation tax, a 10% supplementary charge and the new 35% Energy Profits Levy.
Companies across the basin are reassessing their investment plans, he added, with many deciding not to proceed with new UK North Sea developments.
Instead, many of the earmarked investments are being transferred to the US where tax rates are typically between 35% and 39% and where oil and gas investments are booming, Ratcliffe claimed.
“The UK government's so called `windfall tax’ is really primitive politics. There has been no thought given to the long-term consequences of this ‘tax it to death’ move," he said. "Taxes are now so high that profits no longer fund future investments, and on top of this, new investments have poor returns with invariably high tax rates.”
INEOS FPS is spending up to £1 billion ($1.25 billion) upgrading the network to ensure it remains fit for purpose until the 2040s, but this depends on the basin remaining a viable oil and gas hub, he explained.
“In the UK, we have seen perpetual tinkering with tax rates and now a massive tax hike," he added. "What the country needs is energy security, which means encouraging developments in our strategic energy reserves in the North Sea, not taxing it out of existence and shutting down the basin.”
05.16.2023
