Page 9 - EurOil Week 01 2021

EurOil POLICY EurOil

UK mulls windfall tax on

oil and gas profits

UK NORTH Sea gas producers may have to pay a Experts at Wood Mackenzie have said that
windfall tax on their near-record profits from a future windfall tax “cannot be ruled out” but
The industry warns that high prices, to help shield households from warned of a backlash from the industry.
the measure will lead to increased energy bills. “There would be a strong resistance from
higher energy bills. The government faces mounting pressure to producers, who would typically stop investment
protect households from the energy crisis, which in response. But if the government is already
has led to record-high gas and power prices considering winding down the sector, this threat
across Europe and has led to fears of winter may not be as persuasive as it has been in the
shortages. Meanwhile, the producers selling this past.”
gas are on track to earn nearly record cash flow Upstream industry OGUK warned that a
of $20bn in the current financial year, according windfall tax would offer consumers “false hopes,”
to Wood Mackenzie. leaving them even more exposed to global gas
Business Secretary Kwasi Kwarteng met shortages. It could add up to GBP700 ($948)
energy bosses for emergency talks on January 4 to the average UK domestic annual energy bill,
to discuss ways of mitigating the crisis but the which is currently GBP1,250.
discussions did not yield any solutions. The pros- “This idea is offering consumers false hope
pect of a windfall tax was first raised in Septem- – and the risk of real long-term damage to UK
ber, when the Spanish government announced plc,” OGUK’s external relations director Jenny
plans to subsidise energy bills through a raid Stanning said. “In the longer term a windfall
on companies that had profited from the crisis. tax would also be the worst thing for consumers
Kwarteng has said he is “not a fan of windfall because it would damage competitiveness, and
taxes”, though “of course [the energy system] is discourage energy companies from investing in
an entire system and we have to think about how the UK. That would reduce our energy security
we can get the energy system as a whole to help and make us even more dependent on imports
itself.” from places like Russia and the Middle East.” ™

Week 01 06•January•2022 www. NEWSBASE .com P9