Total Energies plans to cut its investment by a quarter next year, after the Government tightened the windfall tax last month.
Jean-Luc Guiziou, UK Country Chair at the French super-major confirmed it will slash £100m from its North Sea investment plans for 2023.
He revealed it will no longer proceed with an infill well on Elgin in 2023 as planned.
The group is concerned about the tax and lack of a price floor, meaning the Energy Profits Levy stays in place even if oil and gas prices recede close to conventional trading levels.
He explained: “Following another change to the fiscal environment for energy investors in the UK, we are now evaluating the impact of this change on our current and planned projects. We note that without a price floor to the Energy Profits Levy, the current regime will affect short-cycle investments, in particular infill wells. For 2023 alone, our investments will be cut by 25 per cent.”
The energy firm considers a stable fiscal and regulatory regime to be vital for investment in critical energy and infrastructure projects, as the UK pushes to boost its security of supply and net zero ambitions.
Jeremy Hunt hiked the Energy Profits Levy during the autumn statement by 10 percentage points to a total of 35 per cent, and has extended its reach until 2028.
Oil and gas firms will have to pay 75 per cent on profits until the end of that year, raising £40bn for the Treasury as it grapples with a cost-of-living crisis and record energy bills.
The tax also includes investment relief of 91p in the pound for companies that invest sufficiently in domestic projects.
However, Total Energies has prioritised reducing investment and taking the hit from the tax than risking higher amounts of capital in the North Sea.
This follows fresh warnings from industry body Offshore Energies UK that the latest changes to the windfall tax have made rates “so high that it threatens to drive investment out of the UK altogether.”