BG boss attacks windfall tax blueprint
BG chief executive Frank Chapman yesterday urged the Chancellor not to slap a windfall tax on North Sea profits, warning that it could have a disastrous effect on the economy.
The boss of the gas explorer and producer said the move – which some expect in the Pre-Budget Report – would hit industrial performance and employment, and jeopardise the security of Britain’s gas supply.
But Chapman sidestepped tough questioning over his decision to give BG shareholders a £1bn bonanza rather than pass the money back to customers whose gas bills have soared in recent months. BG does not directly supply or bill domestic consumers, but sells gas to industry and distributors such as Centrica.
Chapman’s remarks came as the group, down 1p to 527p, revealed another leap in profits, boosted by high oil and gas prices. BG reported a 44pc profits rise to £308m in the third quarter.
It said it was returning £1bn to shareholders, and was adding an extra £500m to its investment budget to push forward new projects. Much of the cash came from the £800m disposal of its North Caspian project.
But Chapman said the impressive financial performance should not encourage Gordon Brown to target oil producers.
‘We believe this would stifle investment in the North Sea, and therefore would not be in the national interest,’ he declared. ‘It’s very important that we do all we can to stimulate investment there. I think it is fair to say that, as of last year, the Chancellor was still receiving some £6bn from oil revenues, more than he did in 2003/4.’
Chapman also defended BG’s decision to raise its selling price by 3p to 23p a therm, saying the UK had switched from being a gas exporter to a gas importer – making higher prices inevitable.
The cash windfall for shareholders was unusual for BG, which usually spends more on investment. Some analysts suggested the company had struggled to find decent opportunities.
The International Energy Agency this week urged the industry to raise the amount it is spending on new projects to keep prices from rising higher still.
But Chapman expressed scepticism about the IEA figures.
He said:‘We as an industry have been wrong about this before, and we could easily be wrong about it in the future.’