The Strategist

Total to cut investments in North Sea by 25% because of UK excess profits tax

12/06/2022 - 06:26

Due to the recently increased excess profits tax in the UK, French oil and gas giant TotalEnergies will reduce its expenditures in North Sea projects by 25% in 2023.

Betty Longbottom
Betty Longbottom
The managing director of TotalEnergies UK, Jean-Luc Guiziou, made this announcement in an interview with Energy Voice. The projects will get a reduction of £100 million from the company's original plan to invest £400 million ($490 million) in them the following year.

In November, Britain made the decision to increase taxes on oil and gas companies' surplus profits from 25% to 35%. According to these regulations, businesses will only be permitted to deduct certain investments from taxable income, such as new oil and gas projects and specific initiatives to cut greenhouse gas emissions.

Mr. Giziou pointed out, among other things, that the excess profits law lacks a mechanism to react to falling energy costs, despite the fact that those prices are extremely unpredictable.

According to analysts, the total taxes paid by oil and gas corporations in the UK might reach 75% after the rise, ranking among the highest rates in the world. Shell and Equinor, two energy corporations, have stated that the tax rise would force them to reevaluate their investment plans.



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