Oil and gas industries reject call for windfall tax

Oil and gas producers have pushed against a windfall tax on their profits in light of rising prices.

Prime Minister Boris Johnson has come under pressure to introduce a one-off levy on firms which have benefited from globally high oil and gas prices and use the revenue to fund measures to ease the cost-of-living crisis on households struggling with rising bills.

Offshore Energies UK (OEUK), the body which represents the UK offshore oil and gas industry, says the Treasury will get £8 billion from the sector and another £5 billion next year, which is on top of £370 billion which has been paid over the last decade.

OEUK chief executive Deirdre Michie told Times Radio: “The point is that the tax regime is working.

“The Government can use those monies to spend on helping consumers.

“We recognise the crisis is a massive and significant one which does need addressing.”

She added: “We need these companies to keep investing in oil and gas for security of energy supply but we also need them to invest in the energy transition.

“We have identified up to £250 billion of investment opportunity over all of the energies but only a third of that is sanctioned, so that if people start to feel this is not a good place in which to invest they will take their investment elsewhere.”

Many operators, other than BP, in the North Sea are “really worried” that a windfall tax could impact their investments, according to the head of the body which represents the UK offshore oil and gas industry.

A stable and predictable tax regime is needed to help confidence and many operators, other than BP, in the North Sea are “really worried” that a change could impact their investments or hit the supply chain, according to Ms Michie.

She told the programme: “They are really concerned that if an investment from the operators starts to step away it will undermine the projects they are hoping to come through and that is where the jobs start to go.

“It is the supply chain that has the jobs.

“It also has the expertise and the skills that are going to underpin the energy transition.

“We should be in no doubt that it is the whole gas companies their supply chain that is going to drive the energy transition forward.”

Earlier this week Labour leader Sir Keir Starmer suggested that a one-off tax would “raise billions of pounds, cutting energy bills across the country”.

Speaking at Prime Minister’s Questions he urged Mr Johnson to make an “inevitable U-turn” on imposing a windfall tax  on oil and gas producers.

Mr Johnson defended the Government’s existing package of support in response to cost-of-living increases, adding that “all sensible measures” will be looked at.

A Labour amendment to the Queen’s Speech asking for a new tax on the profits of oil and gas producers was defeated by 310 votes to 248, majority 62, and was not supported by any Conservative MP.