Shell reacts to windfall tax hike saying it is being forced to review its £25bn UK investment plans

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Shell will review its £25bn UK investment plans on a ‘case-by-case’ basis after the government made an unexpected tax increase on North Sea oil and gas producers.

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David Bunch, UK chairman of the energy giant, said it would ask for ‘revisions’ to the policy.

Shell is one of the operators affected by last week’s increase in the so-called energy profit levy (EPL) from 25 per cent to 35 per cent.

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Windfall crisis: Shell’s UK executive chairman David Bunch (pictured) wants to see changes to the government’s energy benefits levy

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It was introduced at a lower level earlier this year to help pay for the government’s energy bill package for consumers and bumped up after widening the scale of the multi-billion package in the Chancellor’s Autumn Statement last week was.

Bunch told the annual conference of the Confederation of British Industry (CBI): ‘We have to evaluate each project on a case-by-case basis.’

He said some producers – which are largely focused on the North Sea, unlike Shell which has much larger operations around the world – would be more exposed than others.

The windfall tax comes on top of the high levels of corporation tax already paid by UK oil and gas producers, taking the total tax rate on those firms to 75 per cent.

It is expected to raise over £40 billion over five years. Bunch said he thought the tax could discourage investment for some operators.

‘For an independent focused heavily on the North Sea basin, it can leave the region a bit cold,’ he said.

Bunch said while ‘no one likes windfall taxes’, Shell understands ‘the role we play in society’ at a time when homes – some of them supplied by the company’s home energy arm – are facing bills struggle with.

“Nobody should have to choose between heating the house or eating,” he said. ‘This is totally unacceptable.’

Bunch said the levy was ‘understandable’, and an allowance which meant they could deduct tax if they invested was ‘helpful to an extent’.

This means Shell is paying nothing this year, although it is expected to be hit with bills in the hundreds of millions of pounds under the policy in the future.

But Bunch added: ‘I would say this is a second windfall tax – Windfall 2.0 – and unfortunately it doesn’t have a price position [on crude oil or gas],

As we all know, things go up and down and the reality is, like all of us, when you are taxed higher you will have less disposable income in your pocket to invest. low.

‘We have set a path to invest £25 billion, which is, in fact, far more cash than can be generated in the UK.

‘We were investing back in green and low energy wind generation, electric charging etc.

‘So it is a challenge and we will hopefully work and consult with the government on some amendments.’

Brindex, a trade body representing independent oil and gas firms, has already expressed dismay at the unexpected tax hike, claiming it will stifle investment and deepen the recession.

Credit: www.thisismoney.co.uk /

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