A major North Sea oil and gas company has criticized the Conservatives and the Labor Party over the windfall tax that is “killing” investment and jobs in the UK, as it looks for opportunities in Norway.
Serica Energy chairman David Latin accused politicians of a “race to the bottom” to extract more money in the short term despite causing long-term damage to production and making Britain more dependent on energy. imports.
“UK policy will boost oil and gas investment overseas, taking jobs, tax revenue and energy security with it,” he said.
‘This is actually making us look for acquisition opportunities abroad. And Norway is a place that has a lot of opportunities, because it is a younger part of the North Sea.”
The windfall tax on North Sea oil and gas profits was imposed in 2022 after a spike in energy prices following Russia’s invasion of Ukraine.
Oil crunch: The windfall tax on North Sea oil and gas profits was first imposed in 2022 after a surge in energy prices following Russia’s invasion of Ukraine.
This year, Jeremy Hunt extended it until 2029.
The 35 percent tax, on top of the existing tax burden, means energy companies face an overall rate of 75 percent. The Labor Party says it will raise it to 78 per cent if it comes to power.
Latin is the latest industry figure to warn about the impact of the tax. His comments echoed caution expressed by companies such as energy giant Shell about reducing fossil fuel production too quickly, before enough renewable sources are available to replace them.
Serica reported a 37 per cent drop in pre-tax profits to £306m by 2023 as raw material prices fell and operating costs rose.
Last year saw an average selling price of around $63 per barrel of oil, compared to $104 in 2022.
Latin said: ‘Any “windfall” due to high commodity prices is long gone and the high tax situation is not well suited to a mature oil and gas basin like the UK’s North Sea.
“Its continuation will not benefit the people of the UK financially or environmentally.”
Statement: David Latin, President of Serica Energy
The chairman, who also took over as interim chief executive while the company searches for a replacement for the outgoing Mitch Flegg, said there had been “concerning developments” coming from Westminster during the year.
Latin highlighted the decision to maintain the windfall tax “long after any justification based on oil and gas prices had disappeared” and then extend it. And he highlighted that the Labor Party plans to increase the tax and ‘significantly reduce’ the current tax exemptions that encourage investment.
He added: ‘The uncertainty caused by political short-termism risks killing investment across the UK North Sea sector and with it the associated high-quality jobs it creates across the UK.
‘It would appear that the established policy of maximizing the economic recovery of the UK’s remaining oil and gas reserves in support of the energy transition has been abandoned.
“Instead, our politicians appear to have embarked on a race to the bottom with policies aimed at maximizing government involvement in the short term.”
That will accelerate the decline in production and reduce tax revenue from the North Sea, which will mean an increase in oil and gas imports, Latin added.
“Imported production can be easily disrupted, pays no UK tax, does not support UK jobs and often involves higher carbon emissions,” he said.
“This policy change is a sad demonstration of the high level of UK political risk our industry now faces and has caused all companies operating on the UK continental shelf, including Serica, to reconsider their investment plans in the UK. United Kingdom”.
