France's TotalEnergies says it will reduce investment after the decision to extend the windfall levy.
French oil giant TotalEnergies has said it will cut North Sea investment by 25% next year after the windfall tax on oil and gas firms in the UK was extended.The windfall tax - the Energy Profits Levy - was raised from 25% to 35% in last month's Autumn Statement and will now stay in place until March 2028.
TotalEnergies is one of the North Sea's biggest oil and gas producers and its decision to cut investment will affect plans to drill a new well at its Elgin gas field. "The energy industry operates in a cyclical market and is subject to volatile commodity prices. We believe that the government should remain open to reviewing the Energy Profits Levy if prices reduce before 2028."The windfall tax on oil and gas companies operating in the North Sea was introduced in May after oil prices increased sharply.
Oil and gas firms operating in the North Sea are already taxed differently to other firms. Taxes on their profits are higher - they pay 30% corporation tax on their profits and a supplementary 10% rate on top of that.Last week, Brindex, an organisation representing smaller independent oil exploration companies in the North Sea, wrote to the chancellor saying the windfall tax increase represented an "existential threat" to the industry.
"Without such a mechanism and to continue down the path of the current anticipated 75% rate, further investment in the UK has become unviable and so begins a rapid onset of the decline of the North Sea," Mr Allen said.
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