France’s TotalEnergies said it would cut investment in North Sea projects by 25% after the government raised a windfall tax on the sector.
TotalEnergies said that the cut in investment for next year equates to £100m. The windfall tax – the Energy Profits Levy – was raised to 35% from 25% in last month’s Autumn Statement and will now stay in place until March 2028.
“For 2023 alone our investments will be cut by 25%” said TotalEnergies’ UK chairman Jean-Luc Guiziou.
“Following another change to the fiscal environment for energy investors in the UK, we are now evaluating the impact of this change on our current and planned projects,” Guiziou added.
Guiziou said that in its present form, without a mechanism to reflect any falls in oil and gas prices, the windfall tax would particularly affect short-term investments such as infill wells near existing production. One project that will be dropped is an infill well on the Elgin field, a company official said.
“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,” Guiziou said.
Shell, BP and Equinor have also said that they were evaluating their investment plans after the windfall tax.
Reporting by Frank Prenesti for Sharecast.com
