Offshore staff
LONDON — Britain’s Energy Profits Levy Bill has become law after passing its final stages in the House of Lords.
The levy, which will raise the UK Treasury a further £5 billion ($5.92 billion) via an additional 25% tax on the profits of UK offshore oil and gas operators, was introduced in response to public disquiet over soaring energy prices.
Offshore Energies UK (OEUK), which represents 400 organizations in the oil and gas sector, said the measure risks driving away investors and undermining the UK’s future energy supplies.
Deirdre Michie, OEUK’s outgoing chief executive, urged ministers "to work with the industry to minimize the damage done to it."
Operators were already paying a 40% tax rate on profits from UK offshore oil and gas production. The combined new tax rate of 65% is the highest faced by any business sector, the association noted, and on an industry that “underpins the nation's energy security, producing the equivalent of 38% of the nation's gas and 82% of its oil in 2021.
"It also supports about 200,000 jobs across the UK, from Shetland to Southampton with concentrations in East Anglia, Merseyside, Yorkshire and northeast England, the northeast of Scotland, Tayside and the Highlands and in Scotland’s Central Belt.”
Michie acknowledged that consumers needed help to cope with their energy bills but warned that doing this through sudden new taxes risked long-term damage to the UK’s businesses and its energy security.
“Exploring for oil and gas and then bringing it to shore is inherently a risky and expensive business, so our members need the UK’s fiscal rules and other regulations to be stable and predictable before they consider investing the hundreds of millions of pounds needed for such projects.," Michie said. “We are...already the UK’s most highly taxed industry, so when new taxes are introduced suddenly, like this one, it makes the UK look like a riskier place to invest.
“That raises the cost of borrowing and so discourages investment in new energy sources just when global events suggest the UK should be doing all it can to maximize its own energy sources.”
She urged the government to work with the industry to minimize the impact of the levy and to reassure investors.
07.15.2022
