ENERGY NEWS
11
MARCH 2022
UK NORTH SEA
Energy Review By Tsvetana Paraskova
Contracts and project developments, calls for a windfall tax on North Sea operators, and the need of more domestic oil and gas supply to ensure energy security were key themes in the UK offshore industry this past month.
Following the bumper profits bp and Shell announced for 2021, in bp’s case, the highest annual profit in eight years, calls from environmental campaigners and the opposition Labour Party intensified on the UK government to impose the so-called windfall tax on North Sea operators, to help raise more revenues for mitigation of the soaring energy bills for households. “These profits are a slap in the face to the millions of people dreading their next energy bill. BP and Shell are raking in billions from the gas price crisis while enjoying one of the most favorable tax regimes in the world for offshore drillers. And these are the same companies responsible for pushing our world closer to catastrophic climate change. This isn't right,” Greenpeace UK’s head of climate Kate Blagojevic said in a statement. Rachel Reeves, Shadow Chancellor of the Exchequer and Labour MP for Leeds West, said that while bp announced their highest profits in 8 years, many people’s energy bills hit the roof and called for the government to back Labour's plan for a one-off windfall tax on North Sea oil and gas producer profits. Scotland’s First Minister, Nicola Sturgeon, backed the idea of a windfall tax, saying that energy firms posting massive profits should “absolutely” pay more. “I want the chancellor and the UK government to be looking at all options,” Sturgeon said. The UK government opposes a windfall tax on energy producers. A windfall tax on oil and gas will not solve the energy crisis, Tim Eggar, chairman of the Oil and Gas Authority (OGA), wrote in an op-ed in the Daily Telegraph in early February. “A windfall tax would not have tackled the global supply and demand dynamic that caused prices to spike. It would have weakened industries’ ability to invest in delivering the gas we rely on to heat our homes, but also in the renewable energy projects we badly need to reduce this dependence,” Eggar wrote. “Gas produced in the UK has less than half the emissions of imported LNG, generates tax receipts and employment opportunities, and enhances our security of supply in an increasingly unstable world,” OGA’s Chairman noted. UK Business and Energy Secretary Kwasi Kwarteng supported the North Sea oil and gas industry, saying on 9 February “Turning off North Sea oil and gas would put energy security, British jobs and new industries at risk - and we’d just end up importing more from abroad. This has to be a transition, not extinction.”
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