Shell demands ‘certainty’ over Labor’s oil policy after Reeves raises windfall tax to 38%

Shell calls for “certainty” over Labor oil and gas policy after Rachel Reeves launched tax raid on the sector.

The energy giant said it would lobby the Government for ‘alternative tax regimes’ after the Chancellor increased windfall tax on North Sea oil and gas producers from 35 per cent to 38 per cent.

It came as the FTSE 100 firm yesterday beat expectations to report a £4.6bn third-quarter profit, in a boost to chief executive Wael Sawan’s strategy to refocus on fossil fuels.

Its shares rose 3.5 per cent, or 88p, to 2,578.5p after beating analyst estimates for a £4.1bn profit. And Shell said it would give investors more returns by buying back £2.7bn of its shares.

But it came after the North Sea oil and gas industry suffered a blow to the budget when Reeves announced plans to increase windfall tax.

It will also extend the tax, which was introduced by the Conservatives in response to soaring energy prices following Russia’s invasion of Ukraine, until 2030.

And it eliminated the investment subsidy, which allows companies to offset taxes on reinvested capital.

‘Elected officials simply have to balance budgets in the best way they see fit. We have to look for policies that provide certainty,” Shell’s chief financial officer, Sinead Gorman, said yesterday.

‘We invest for the long term. We have seen a number of changes to tax policy in recent years, but we continue to engage constructively with the Government on alternative tax regimes to support the future of the North Sea and the energy transition in the UK.’

Although profits exceeded forecasts, total profits fell 3.1 percent compared to last year, amid a “less favorable” macroeconomic environment.

Brent crude prices have remained low for the past six months and lower global oil demand has hit Shell’s refinery margins.

Maurizio Carulli, energy analyst at Quilter Cheviot, said: “There have been headwinds, with lower oil prices and weaker refining margins, so this is an impressive result.”

Shell weakened several carbon reduction targets this year, following other oil and gas giants in placing greater emphasis on financial returns.

It comes amid investor pressure for Shell to close the valuation gap with US rivals Chevron and ExxonMobil.

AJ Bell’s Russ Mold said: “Sawan’s approach has been to streamline and simplify the business, taking a tougher approach to the energy transition.”