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industry & Government news

DIGEST

MINISTERS ARE CALLING FOR A PUNITIVE WINDFALL TAX

NORTH SEA OIL AND GAS COMPANIES

CASH IN AS ENERGY PRICES SKYROCKET

OIL AND GAS companies operating a “cash machine” because of the “We acknowledge we will pay more tax,
in the UK’s North Sea are expected to increasing cost of energy. we want that to happen, and we want those
report “near record” income in 2021 and The Wood Mackenzie analysis will monies to go where they’re most needed.
2022 as the price of energy skyrockets. add to the growing pressure on the “But by disturbing the investment
Wood Mackenzie analysis says that government to announce a windfall tax cycle, we’re just suddenly going to make
UK oil and gas operators are projected on oil and gas companies and to use it more difficult to win investments
to record around $17 billion in cash that money to help ease the burden in the UK, (and) provide secure
flow for last year, and approximately on ordinary people, which the Liberal gas supplies at a point where we
$18 billion this year. Democrats have called for too. desperately need them.”
Such amounts were last seen in the But an industry representative Sky News has previously reported
boom years before the 2008 financial from Oil and Gas UK rejected the idea, that oil and gas companies operating in
crash, reports Sky News. arguing that ordinary tax payments will the North Sea currently benefit from a
Combined with the aggressive cost- increase anyway and that a punitive favourable tax environment including
cutting measures during Covid-19, windfall tax would potentially make it large rebates for decommissioning rigs and
these cash flows are also predicted to more difficult for the industry to invest generous capital expenditure allowances –
lead to near record profits. in the transition to renewables. changes that happened in 2014 under the
Europe’s biggest oil and gas group Director of Sustainability Mike then Chancellor George Osborne.
Shell announced soaring profits in the Tholen said: “In doing so you (would) As a result, many of the companies
fourth quarter of the year because of really disturb investments in the UK, have paid negative tax in recent years,
high gas prices. make us less competitive, drive jobs, leading to the UK being viewed as one
And BP boss Bernard Looney energy and security of supply out of the of the most profitable countries in the
recently described his company as UK and that really is in no-one’s benefit. world for big oil and gas projects.

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27/01/2022 11:48
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