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BP will review its oil and gas investments in the UK, the company said on Thursday, after UK Chancellor Rishi Sunak presented a plan earlier in the day that would assess a 25% windfall tax on North Sea energy companies.
The windfall tax is set to stick around until oil and gas prices return to normal levels, or by December 25.
BP said earlier this month that it was planning on investing £18 billion in the United Kingdom by the end of 2030 to help “the country to deliver on its bold ambitions to boost energy security and reach net zero.”
But rumors of the UK’s windfall tax threatened to deter BP’s additional investments beyond that £18 billion. On May 12th, BP stated that its pledged investment would not be affected by any windfall tax—but anything additional could be stymied with such a penalization.
But that was before the details of the new windfall tax were announced.
“Today’s announcement is not for a one-off tax – it’s a multi-year proposal. Naturally, we will now need to look at the impact of both the new levy and the tax relief on our North Sea investment plans,” BP said on Thursday after the London market closed.
The Energy Profits Levy will apply to profits arising on or after May 26, 2022. The new tax will be charged on oil and gas company profits at a rate of 25% and is expected to raise around $6.3 billion (£5 billion) in its first 12 months, which will go towards easing the burden on families.
Before the announcement of the windfall tax, the main industry body, Offshore Energies UK, warned that such a levy would risk reduced energy security, higher prices for consumers, and long-term damage to the UK’s offshore energy industry.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.