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Charles Kennedy

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ExxonMobil Sues EU Over Investment-Destroying Windfall Profit Tax

  • ExxonMobil Corp. is suing the European Union on the grounds that the 33% windfall tax will hinder investment.
  • The European Union windfall tax gives the bloc the authority to place a 33% levy on energy company profits for 2022.
  • Exxon’s chief financial officer Kathryn Mikells: The tax could cost $2 billion between now and the end of next year.
ExxonMobil

Hitting back at Brussels’ imposition of a windfall tax on oil companies, Exxon Mobil Corp is suing the European Union on the grounds that the tax will hinder investment and end up being “counter-productive”, according to media reports.

According to the Financial Times, the first to report the story, Exxon filed the lawsuit at the European General Court in Luxembourg City on Wednesday through its German and Dutch subsidiaries. The lawsuit challenges the European Union Council’s legal authority to impose a windfall tax using emergency powers to force member state approval of the move. 

The European Union windfall tax gives the bloc the authority to place a 33% levy on energy company profits for 2022.

Reuters cited Exxon spokesperson Casey Norton as saying on Wednesday that Exxon would be accounting for the windfall tax in its future multi-billion-euro investments, warning that the tax was outside the authority of Brussels and that it would end up being a destructive force for investor confidence. 

“Whether we invest here primarily depends on how attractive and globally competitive Europe will be,” Reuters cited Norton as saying.

On December 8, Reuters cited Exxon’s chief financial officer, Kathryn Mikells, as telling analysts that the EU’s windfall profit taxes on oil companies could cost $2 billion between now and the end of next year. That compares to the $3 billion Exxon has invested over the past ten years in European refinery projects.

Exxon argues that its refinery projects are designed to help Europe reduce dependency on Russian oil and gas, and as such, the windfall tax will backfire.

The supermajor American oil company appears to be hoping the lawsuit will pressure Brussels to reverse the windfall tax.

By Charles Kennedy for Oilprice.com

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