Neptune calls for allowance to soften blow of Dutch North Sea tax plans

Offshore staff

LONDON — Neptune Energy has urged the Dutch government to add an investment allowance in its plans to raise levies on energy companies.

The government intends to raise levies under the Mining Act for the energy sector in 2023 and 2024, using the additional tax revenues to help Dutch homes and businesses cope with high energy bills.

Proposals include a temporary increase in tax levy for 2023-24 from a scale between 0% and 7% to a flat rate of 65% for all sales turnover at a price above 50 cents per cubic meter of gas produced.

This would apply not solely to onshore produced gas but also to volumes produced offshore. The amended Mining Act would likely take effect from Jan. 1, 2023.

In addition, the EU adopted an emergency regulation that allows its member states, which include the Netherlands, to levy a further profit tax for 2022 and/or 2023. The Netherlands plans to implement this measure with retroactive effect from Jan. 1, 2022.

According to Neptune, this creates a unique situation where tax rules for companies are significantly changed during a current financial year.

Neptune says its request for the government to include an investment allowance in its tax plans would follow similar measures already in place in Norway and the UK.

In recent years, the company points out, investment in E&P in the Dutch North Sea has dropped to a fraction of that in the Norwegian and UK sectors. Much higher levels of investment would be needed in the near term to get close to the increased gas production potential, as outlined by the Ministry of Economic Affairs.

Neptune, the largest offshore gas producer in the Dutch North Sea, plans to invest about $1 billion in the sector over the next five years. With an appropriate fiscal regime in place, the company said it could invest a further $1 billion, including lower carbon developments, and repurposing existing offshore infrastructure to support carbon capture and storage and hydrogen production.

Managing Director in the Netherlands, Lex de Groot, said, “It is absolutely right that the government supports households and businesses facing higher energy costs. However, it is important that the mechanism they choose to deliver this support does not compromise Dutch energy security or net zero goals by making the Netherlands uncompetitive for global energy investors, which have a choice where to put their capital.

“By introducing an investment allowance, the government would make the Dutch North Sea competitive for investors against other countries that already have such allowances in place.

“The Netherlands has huge potential energy resources, but increased investment is crucial if we are to maintain energy security and avoid customers being exposed to less secure, higher cost and higher carbon energy in the future”.

Since 2018, the company added, it had contributed more than $1.8 billion to Dutch GDP and supported an average of 2,200 jobs each year.

10.20.2022