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London: The French company “Total Energy” said that it will reduce its investments in oil and gas in the North Sea by about 25 percent next year, after the United Kingdom extended the windfall profits tax on energy companies.
“Following another change in the tax environment for UK energy investors, we are now assessing the impact of this change on our current and planned projects,” said Jean-Luc Giziot, UK Head of Production Operations.
“For the year 2023 alone, our investments will be reduced by 25 percent,” he was quoted by the specialized newspaper “Energy Voice”.
In turn, “Total Energy” on Friday confirmed these statements to Agence France-Presse.
The company will cut its investment in the North Sea by 100 million pounds ($123 million) in 2023, after Finance Minister Jeremy Hunt unexpectedly increased the tax on oil and gas giants whose profits have increased as a result of the fallout from the Ukraine war.
The move, approved in last month’s budget, was intended to help fund subsidies for British consumers who have been hit by soaring energy bills.
The government wants the energy sector to foot part of the bill as it tries to prop up the country’s public finances, which have been hit by a combination of political unrest in the UK, support to fight pandemics and the fallout from Brexit.
Nevertheless, Ghizieu said this week that “a competitive and stable financial and regulatory system is vital to investing in critical energy and infrastructure projects that will underpin the UK’s security of supply and environmental and climate ambitions”.
Hunt announced that energy giants, also including Shell and BP, would face an exceptional profit tax of 35%, up from 25%, for an additional three years to 2028.
“The (British) government should remain open to reviewing the energy dividend tax if prices fall before 2028,” Gizio said.