By Ron Bousso
LONDON (Reuters) – British finance minister Jeremy Hunt said on Wednesday he would extend by one year a windfall levy on North Sea oil and gas firms’ profits.
The Energy Profit Levy (EPL) was introduced in May 2022 after a jump in energy prices resulting from Russia’s full-scale invasion of Ukraine.
Presenting Britain’s budget in parliament, Hunt said the one-year extension to 2029 — forecast to raise 1.5 billion pounds ($1.91 billion) — was due to expectations that energy prices will remain higher for longer.
Hunt increased the tax in November 2022 from its initial 25% rate to 35%, bringing the overall tax burden on North Sea oil and gas producers to 75%, among the highest in the world. He also extended the tax until 2028 rather than 2025.
The tax rate itself, as well as a 29% investment allowance in the windfall tax that allows companies to offset spending, will remain unchanged, he said.
Reuters reported on the planned extension on Monday.
The Treasury also confirmed no changes were made to a separate windfall tax on low-carbon power producers, known as the electricity generation levy, which will remain in place until the end of March 2028.
After reaching a record high in early 2022, benchmark British gas prices are today back at pre-crisis level. Oil prices are also at pre-invasion levels.
David Whitehouse, chief executive of industry body Offshore Energies UK said the windfall tax was “a disappointing blow to the industry which risks jobs, investment and economic growth.”
“The industry is being taxed on windfall profits which no longer exist and facing a fourth round of fiscal change and turmoil in less than two years, making it impossible to plan investment for the energy transition and the path to net zero” carbon emissions,” Whitehouse said in a statement.
($1 = 0.7861 pounds)
(Reporting by Ron Bousso, Susanna Twidale and William James; Editing by Sachin Ravikumar, Alexandra Hudson)
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