Page 5 - EurOil Week 45 2022

EurOil COMMENTARY EurOil

UK Finance Minister
Jeremy Hunt.

commitment to reaching net zero by 2050, by uncertainty which, for investors, make the basin
undercutting investments by oil and gas com- riskier, harder to predict and which negatively
panies in low-carbon technologies such as wind impact on decisions to invest in the UK,” BRIN-
and hydrogen, OEUK said. DEX said. “Windfall taxes may deliver increased
“Driving investment out of UK waters short-term revenues but they negatively impact
into other countries will increase reliance on longer-term energy security and the appetite
imported energy, reduce the tax flow to the and financial ability to deliver on the energy
Exchequer and make it even harder to increase transition.”
our domestic production of lower-carbon ener- The association said that the UK was “already
gies,” OEUK said. “We need a diverse range of high-risk, high-cost and technically challenging”
offshore operators and supply chain companies because of its maturity and geology, which has
with the skills and people to build the low-car- meant that investment is becoming “increasingly
bon energy future we all want to see. It deeply more difficult” compared with other countries.
concerns us that the complexity of the UK off- The government of new UK Prime Minis-
shore energy sector is not being considered ter Rishi Sunak is under heightened pressure
when we are on the cusp of such an important to show financial discipline in the upcoming
transition.” budget, following his predecessor Liz Truss’
The chairman of Ithaca Energy, a newly-listed disastrous “mini-budget” in September that
North Sea oil and gas producer, likewise said last proposed sweeping tax cuts for the wealthy and
week that removing incentives to invest in UK triggered markets to slump. But simultaneously
oil and gas would make the country’s offshore the country is in the grip of an energy crisis.
industry uneconomical. If the windfall tax increase is approved, this
Meanwhile, the Association of British Inde- may win the government some public favour,
pendent Exploration Companies (BRINDEX) although the impact on investment will take
wrote to Chancellor Hunt warning that the “UK years to be seen. Under Truss, the UK launched
is now one of the most fiscally unstable and its first offshore oil and gas licensing round in
complex regimes for oil and gas companies.” three years in October. But higher taxes, and the
The North Sea body represents 20 UK oil and risk of further uncertainty further down the line,
gas producers including top ten suppliers such as is likely to sap interest somewhat. Meanwhile,
Harbour Energy, Ithaca Energy and Neo Energy. companies may defer decisions on develop-
“Windfall taxes create fiscal shock and ments that they expected to take this year. ™

Week 45 14•November•2022 www. NEWSBASE .com P5