Home Money Windfall tax is driving UK oil and gas producers to Norway, says MAGGIE PAGANO

Windfall tax is driving UK oil and gas producers to Norway, says MAGGIE PAGANO

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Squeezed: The government is keeping its 'windfall profits' tax in place long after any possible justification based on oil and gas prices.

Serica Energy is one of Britain’s top ten oil and gas producers, producing around 41,000 barrels of oil a year.

Its portfolio of new projects includes the redevelopment of Buchan, 120 miles north-east of Aberdeen, the third largest undeveloped field in UK waters behind Rosebank and Cambo.

Its acting president and CEO is David Latin, an industry veteran with more than 30 years of experience working in the upstream sector, including senior positions at BP and multinational oil giant OMV Group, where he led its operations in Norway. .

In other words, know your onions.

So when Latin warns that the Government’s crazy fiscal war against oil and gas producers is leading Serica to seek new investments elsewhere in the North Sea – like Norway – we should shudder. And possibly cry.

Squeezed: The government is keeping its ‘windfall profits’ tax in place long after any possible justification based on oil and gas prices.

The inconsistency is too much to bear: the fact that Britain’s penal tax regime can force a British oil producer to go to the land of the oil-rich Vikings to explore for energy when we still have our own gold black is absurd.

However, that is the situation that Latin America is warning about, not only for Serica but also for other UK oil producers.

If Serica and its peers go elsewhere, so will UK jobs, tax revenues and, most importantly, energy security.

Why, you have to ask, would any government be willing to penalize its oil producers after the energy shock triggered by Russia’s war against Ukraine, which sent oil and gas prices soaring and inflation soaring?

Latin rightly points to Westminster – rather than Moscow – for the problems facing the sector.

Perversely, the Government keeps its “windfall” tax in place long after any possible justification based on oil and gas prices. (Serica sold oil at $63 per barrel of oil equivalent last year, compared to $104 in 2022.)

What’s more, Chancellor Jeremy Hunt extended the tax until 2029. Labor will further hit the industry if it comes to power: the party has threatened to raise the tax rate to 78 per cent and reduce capital relief on investment, compared to the current regime.

If current fiscal policy succeeds in driving oil producers elsewhere, there is only one option: we will have to import more.

Even the fiercest of the anti-fossil fuel brigade know that we will need more oil and gas for decades to cover the transition period. Until now, the agreed policy has been to maximize the recovery of the UK’s remaining reserves.

But as the Serica boss points out, this policy has clearly been abandoned due to the Government’s short-termism.

That has enormous consequences; more volatile and unreliable imports, less UK tax revenue, fewer high-quality jobs and more carbon because supplies have to travel.

The Government’s position is not only laughable in the short term but goes against all attempts to maximize energy security for future generations.

So is Labour’s plan to raise taxes, but also to stop new exploration licenses in the North Sea.

Ironically, Labor probably won’t need it because explorers like Serica will have gone hunting in other waters.

GMB union leader Gary Smith calls Labor policy economically illiterate. The tragedy is that conservative politics has been equally illiterate.

No to the salary increase for the head of the exchange

Investors today have a complicated decision. They vote on whether David Schwimmer, head of the London Stock Exchange Group, should receive a further £7m, taking the salary to £13m.

The advisory companies ISS and Glass Lewis urge you to vote against.

The exchange says he should be paid like his peers who run Nasdaq or data companies like S&P Global.

He points out that since taking over six years ago, the American lawyer turned Goldman Sachs boss has doubled the share price.

While true, this was due to the $27 billion acquisition of Refinitiv, which boosted the stock and made it a data provider that now accounts for the majority of revenue.

And that’s the elephant in the room: is it a data provider or a stock exchange raising capital? Can it be both?

The London Stock Exchange and Aim, its junior market, are struggling amid defections to Wall Street and low valuations, leading to a frenzy of acquisitions, mainly of American companies, and onerous regulations.

Schwimmer must demonstrate how he plans to improve performance – to become more like the Nasdaq – before he is raised.

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