ENERGY industry bigwigs have warned the first signs of the windfall tax’s chilling effect on investment are starting to be felt after reports that the Norwegian state energy company is considering abandoning a £4.5bn North Sea oil project.
The Sunday Telegraph reported this weekend that Equinor’s involvement in the Rosebank Field was now in question as a result of the so-called ‘temporary targeted energy profits levy’ introduced by Chancellor Rishi Sunak last month, which sees North Sea oil and gas firms hit with a levy amid higher than usual energy prices.
Last night Deirdre Michie, the chief executive of Offshore Energies UK, warned that without investment, some 80 per cent of the UK’s gas and 70 per cent of the country’s oil supplies will need to be sourced from abroad.
“The windfall tax may not affect projects already under way – but is likely to deter investments under consideration for which funds have yet to be committed. The UK’s offshore sector includes many independent companies who spend years planning investments that can be very risky,” she said.
There are also questions over a £2bn investment planned by Shell in the Cambo oil field, also in the North Sea.
Norway last year became the UK’s primary gas supplier, exceeding domestic supplies for the first time.
The UK government has made great play of its desire to produce more of the country’s energy supply at home, particularly after Russia’s invasion of Ukraine saw global gas and oil supplies fall significantly.
Michie warned new taxes increase the cost of borrowing for new projects, further deterring investment.