The UK chair of oil supermajor Shell warned Britain’s windfall tax on oil & gas profits could threaten up to £25bn ($29.7bn) of investments including North Sea renewables and other clean energy plans.
David Bunch said Britain’s ‘energy profits levy’ – which has just increased to 35% and been extended to 2028 – would “chill” investment prospects offshore UK and told The Telegraph newspaper means “we cannot take it for granted” that the full amount earmarked earlier by Shell would be spent.
“When we looked at the long-term investment plan, and the likelihood of projects, we assumed a kind of fiscal calculus and that's changed, so you've got to rerun everything,” Bunch told the newspaper at the annual conference of UK business group the CBI, with plans likely to be reviewed on a case-by-case basis.
Shell said in March that it planned to invest £20-25bn in the UK over the next 10 years, with about 75% of that going to what it described as “low carbon” sectors including offshore wind, hydrogen and carbon capture.
The supermajor was one of the biggest winners in the ScotWind leasing round, where it secured seabed to develop 5GW of floating wind in conjunction with partner Iberdrola.
Fellow supermajor BP, which also has major UK offshore wind plans, has taken a different line. Its UK chief Louise Kingham, speaking before the increased windfall tax was confirmed but had already been widely trailed, said it would not slow its plans regardless.
The British government is already under fire from its renewable electricity sector over a parallel 45% windfall tax on green and nuclear power revenues above £75/MWh. The industry is furious that the levy does not apply to fossil generators, or give green players the type of investment tax breaks on offer to oil & gas groups to plough back into new hydrocarbons expansion.