TotalEnergies will cut its investment in British North Sea oil and gas projects by a quarter next year after the UK government hiked a windfall tax on the sector, the French firm's British exploration and production chief said on Wednesday.
Energy giants Shell and Equinor have also said they were evaluating their investment plans after the windfall tax was raised to 35% from 25% this month to help plug Britain's fiscal hole.
The windfall tax, on top of several other taxes the sector is subject to, brings the overall tax rate to 75%, among the highest in the world. "For 2023 alone, our investments will be cut by 25%," Jean Luc Guiziou said in a statement first reported by Energy Voice.
TotalEnergies, the British North Sea's second-biggest oil and gas producer according to Woodmac data, had originally planned to spend 400 million pounds ($491 million) in the British North Sea next year, a spokesperson said.
Guiziou said in its current form without a mechanism to reflect any falls in oil and gas prices, the windfall tax will particularly affect short-term investments such as infill wells near existing production.
One project that will be axed is an infill well on the Elgin field, the spokesperson added.
"The energy industry operates in a cyclical market and is subject to volatile commodity prices. We believe that the Government should remain open to reviewing the energy profits levy if prices reduce before 2028," Guiziou said.
($1 = 0.8157 pounds)
Britain's biggest oil and gas producers https://tmsnrt.rs/3wP1xyu
North Sea spending - https://tmsnrt.rs/3fY5oVu
North Sea's decline - https://tmsnrt.rs/3Eo2fYt
(Reuters - Reporting by Tassilo Hummel and Shadia Nasralla; Editing by Bernadette Baum)