British Business Secretary Quasi Quarteng has sent a letter to oil and gas companies operating in the North Sea, asking them to present a clear plan for reinvesting their profits in British energy projects, the government said, according to Reuters.
Energy prices have hit record highs this year, and big profits from energy producers have led to repeated calls by the opposition Labor Party for an emergency tax on North Sea oil and gas producers in order to finance with increased power bills.
Earlier this month, the government unveiled plans to upgrade domestic sources of affordable, clean and safe energy and a new round of licensing for North Sea oil and gas.
“In return for the British Government’s continued support for the sector, the Prime Minister, the Treasury Secretary and I want to see a very clear plan by the oil and gas industry to reinvest profits in the North Sea,” Quarteng wrote in his letter to industry.
“At our next meeting in the coming weeks, I would like to outline how you will reinvest profits, double investment in clean energy, and most importantly, how to accelerate and maximize domestic oil and gas production.”
Quarteng said he remained of the view that an emergency tax would hamper investment, but added that the government had almost never ruled out future tax changes, which depend on Finance Minister Risi Sunak.
Earlier this week, Sunak said he could consider imposing an emergency tax if investment does not increase.
“Honestly, I think they will make these investments. Shell has already announced a 25 25 billion investment and others will do the same,” Quarteng told the BBC.
“If you ask a company to invest in North Sea gas, it does not seem very reasonable to me to impose an extraordinary tax on it, which is arbitrary,” he added.
Electricity and gas prices for millions of households have risen by 54% since April, when regulator Ofgem raised the ceiling on the most widely used tariffs, as wholesale global gas prices hit record highs.
Following the new ceiling, Russia’s invasion of Ukraine further pushed world gas prices further, and Quarteng said he could not say how long the high prices would last.
Source: Capital
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