Energy giant BP backs down from threat of North Sea investments over windfall tax

In a bid to tackle in the energy crisis that is threatening to throw millions of families into fuel poverty, former Chancellor Rishi Sunak had unveiled a package of measures in May, that totalled £37billion aimed at easing the cost-of-living crisis. These measures were paid for by a 25 percent windfall tax on the profits of oil and gas producers, referred to as a temporary, targeted Energy Profits Levy by Mr Sunak.

Following that announcement, BP warned that it would review all of its oil and gas investments as a result of the windfall tax.

Now, BP’s UK head, Louise Kingham, has backed away from that threat, saying that the Government’s new clarity on the levy’s end date of December 2025 means it no longer needs to review investments.

Speaking to MPs on the environmental audit committee this week, she said: “We’ve still got a little bit of vagary around the sort of historic price and when we return to the price … so I think that will still hinder some in trying to do the detailed economics for their investment plans.

“What we know now without all of that clarity is that we don’t think at BP that the profits levy will impact on the investment plans we have in the North Sea.”

As part of the Energy Profits Levy, Mr Sunak also included an investment allowance that would hand companies 91p in tax savings for every £1 invested in North Sea projects during the lifetime of the tax.

The Government estimated that a further £8billion worth of North Sea projects could be sped up as a result of this investment boost

However, Ms Kingham and Shell’s UK chair, David Bunch dismissed this notion, adding that it was unlikely to “significantly accelerate” the projects by more than a few months

Mr Bunch said: “These projects are incredibly complex, they are sometimes decades in the planning and approval.

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