Offshore oil rig

Offshore energy firms claim that windfall tax will damage investor confidence

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A potential windfall tax on offshore energy firms would “undermine crucial investor confidence”, firms in the sector have said.

Chancellor Rishi Sunak is reportedly considering a windfall tax on offshore energy firms who have made huge profits in recent months due to sharp increases in the price of oil and gas. The money raised could then be used to help to help households struggling with soaring food and energy costs.

But 31 companies working in the offshore energy supply chain have written an open letter to Sunak and Prime Minister Boris Johnson saying that such a move would amount to a “blunt short-term response which could undermine the levers to long-term solutions”.

“Our companies, still recovering from the last downturn, today help support some 200,000 jobs and contribute billions to local economies across the UK. As an already fragile supply chain supporting these producers, any further risks to future activity would have severe consequences,” it reads.

According to the Financial Times, electricity producers could have made more than £10bn in excess profits as a result of higher gas prices while consumers face massive rises in their energy bills and daily living costs.

The letter claims that operators are already set to pay £7.8bn in production taxes this financial year alone, money that could be used to “offset the consumer crisis” while not “undermining crucial investor confidence”.

It says that such a move could disrupt the confidence of investors for many years to come who will look elsewhere for long-term, stable, oil exploration projects.

“To date this industry has paid over £375bn in production taxes alone – equivalent to building more than 4,000 hospitals while supporting thousands of supply chain jobs in the process,” the letter states.

Meanwhile, Offshore Energies UK (OEUK), a body which represents the UK offshore energy sector, has claimed that environmental activists are risking the country’s energy security while hindering its efforts to reach net zero.

Speaking at a conference later today, the group’s chief executive Deirdre Michie is expected to denounce the raft of protests and legal action from the likes of Extinction Rebellion, Just Stop Oil, Greenpeace and other bodies focused on protecting the environment.

“It’s no irony to say that we are aligned with their long-term vision, of a low-carbon UK. But we do disagree with their approach as to how we get there. Because the actions they’ve been taking – headline grabbing but damaging – are another risk to investor confidence,” Michie will say.

A spokesman for Greenpeace UK said: “It’s our dependence on fossil fuels that’s undermining our energy security, not the activists highlighting the problem.

“It’s fossil fuels that are giving us budget-busting energy bills, funding Putin’s war and fuelling megadroughts and record-breaking heatwaves all over the world.

“The quickest way to boost our energy security is to fix our energy-wasting homes and make the most of cheap renewables like solar and wind, not drill new oil and gas wells that will take years to develop.

“The organisation formerly known as Oil and Gas UK has done more than most to get us into this mess.

“No wonder their solution is to double down on the fossil fuels that caused the problem in the first place.”

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