Business Maverick: UK oil windfall tax prompts BP to review investment plans

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BP Plc said it will look again at its plans in the UK, raising questions about whether a £5 billion windfall tax on oil and gas profits announced by the government included enough incentives to preserve investment.

previously said

The major risk to the UK North Sea oil and gas industry is that international companies like BP and Shell, which are scaling back fossil-fuel investments in favor of low-carbon energy, see the UK as less attractive following this announcement, JP Morgan’s managing director for Global Energy Christyan Malek said in an interview. A windfall tax “creates unpredictability for projects that take years to develop”, Malek said.

Companies such as Serica Energy Plc, which have low proportion of capital expenditure compared to earnings before interest, depreciation, amortization, and exploration would also feel a bigger impact than most, Stifel analyst Chris Wheaton wrote in a research note.EnQuest Plc, which produces more than 90% of its oil and gas in the UK, said it was “disappointed with the implementation mechanics” of the new levy. The industry lobby group was more direct in its criticism.

Demands to intervene in the cost-of-living crisis have become overwhelming, with a windfall tax increasingly popular among Britons. The governing Conservative Party has trailed Labour in YouGov polling since December. Sunak’s move also comes as the government tries to shift the narrative from the scandal surrounding illegal parties in Downing Street during the pandemic.

 

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