ENERGY companies have been complaining to Chancellor Rishi Sunak that the windfall tax could damage investment in the North Sea.
The Chancellor unveiled the measures last month, after calls from Labour, which will place a 25% surcharge on profits of oil and gas giants.
It is hoped that the new policy could raise as much as £5 billion, but energy firms have said it could be detrimental to the sector.
During a roundtable meeting in Aberdeen, Offshore Energy UK chief executive Deirdre Michie said: “The energy profits levy is an unexpected new tax that changes the basis for investments.
“We had a candid and constructive meeting with the Chancellor to discuss these issues and our industry leaders were clear about their concerns, especially the impact on investor confidence.
“Both sides have committed to further discussions.”
The warnings to the Chancellor come despite energy companies like BP announcing that profits had more than doubled to around £4.9bn in the first three months of this year.
Likewise, Shell’s profits almost tripled to a record-breaking £7.3bn.
Both companies also said they had felt the impact of the Ukraine War and that pulling out of Russian investments has cost them £3.1bn.
Michie added: “We will work constructively with the UK Government and do our best to mitigate the damage this tax will cause, but if energy companies reduce investment in UK waters, then they will produce less oil and gas.
“That means they will eventually be paying less taxes and have less money to invest in low carbon energy.”
A consultation on the policy is set to close on Tuesday.
According to the Treasury, Sunak stressed the importance of the sector to the UK’s transition away from fossil fuels, as well as emphasising that the levy will provide tax relief on investments within the sector.
Chief executive of the North Sea Transition Authority (NSTA) Andy Samuel said: “We very much appreciated the constructive meeting – the tripartite between Government, industry and the NSTA remains crucial for energy security and achieving net-zero.
“We welcome the consultation on the draft Bill – it is crucial to get it right and more broadly to restore investor confidence and support important projects including clean power for offshore installations.”
