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Shares in UK-listed oil companies slumped on Thursday as Britain’s main opposition party, the Labour Party, vowed to increase taxes on the sector in a pledge for a greener economy, drawing criticism from the oil industry association.
The Labour Party launched on Thursday a radical new manifesto ahead of the general elections in the UK on December 12.
The manifesto, described by Financial Times as “Labour’s most leftwing manifesto in a generation,” pledges “introduce a windfall tax on oil companies, so that the companies that knowingly damaged our climate will help cover the costs.”
“We will provide a strategy to safeguard the people, jobs and skills that depend on the offshore oil and gas industry,” the Labour Party says in its manifesto.
The main opposition party in the UK promises “A Green Industrial Revolution,” in which many more offshore and onshore wind farms will be built across the UK and its shores.
At first glance, it is not clear now the ‘windfall tax’ on oil companies will be implemented and how much they could be forced pay, according to analysts at Redburn, cited by Reuters.
Many Big Oil companies, including Exxon, BP, Shell, Total, Equinor, Eni, and Repsol, operate in the UK, so in theory they could also be targeted for the new taxes together with the smaller UK exploration and production companies, according to Redburn.
On Thursday afternoon, shares in Premier Oil, Tullow Oil, and Cairn Energy were all down on the London stock exchange.
“Any increase in tax rates will drive investors away and damage the long-term competitiveness of the UK’s offshore oil and gas industry, threatening jobs and future tax revenues and needlessly damaging the UK economy,” Gareth Wynn, stakeholder and communications director at industry body OGUK, told Reuters.
In recent months, a trend has emerged on the UK Continental Shelf (UKCS)—smaller companies acquire assets of international oil majors, especially U.S. majors. Earlier this month, Chevron became the latest American oil major to have quit the UK North Sea after Delek Group’s Ithaca Energy completed the acquisition of Chevron’s North Sea assets in the UK for US$2 billion.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.