Page 15 - EurOil Week 46 2022

EurOil POLICY EurOil

UK hikes oil, gas windfall

tax as expected

UK THE UK government has followed through with crippling input costs, renewable stations
on plans to increase its windfall tax on energy have been enjoying windfall profits.
The North Sea industry industry profits, as part of a package of measures The adjustment to the energy profits levy is
has slapped the unveiled to shore up the country’s finances. expected to raise an extra GBP14bn ($16.5bn)
investment, warning The levy on oil and gas income will be increased for government coffers over the course of its
it will endanger to 35% from 25%, and will also be extended to duration. The increase in tax for oil and gas
investment. electricity generators, applying a 45% levy on their producers will apply between January 2024 and
profits from the start of next year. March 2028.
Soaring oil, gas and power prices over the past The North Sea industry earlier slammed the
year have pushed household and business energy proposed increase in the levy, warning that it
bills to record highs, serving as the main cause of would endanger investment and leave the UK
the country’s worst cost-of-living crisis in gen- more reliant on imported energy.
erations. The government is also under pressure “The UK’s oil and gas producers were already
from markets to display fiscal discipline, in the paying an effective tax rate of 40% – the highest
wake of a disastrous mini-budget announced by rate of any industrial sector – on the profits from
former Prime Minister Liz Truss in September oil and gas production, before the additional
that caused the value of UK markets to tank. 25% windfall tax was imposed earlier this year,”
Currently, the cost of producing power industry association OEUK said. “It means they
from gas-fired power plants is considered as are already now paying a 65% tax rate.”
the benchmark for setting wholesale electricity A further 10% hike would therefore bring the
prices, in turn determining how much house- total to 75%, “a rate so high that many oil and gas
holds and businesses pay for power. So while producers would have to reconsider investment
gas-fired power generators have been struggling plans worth billions,” the group said. ™

Week 46 21•November•2022 www. NEWSBASE .com P15