Windfall tax would hit North Sea investment, says energy supplier

ONE of the North Sea’s largest oil and gas producers has hinted that a windfall tax would deter investment in the ageing basin.

Gilad Myerson, executive chairman of Ithaca Energy, said developers needed to be able to judge long-term economic returns from their projects.

The company is considering whether to pump billions of pounds into new North Sea drilling.

“One of the things that is attractive in the North Sea is the fact that the UK has been very clear and coherent when it comes to the tax regime as well as the approach to handling decommissioning liabilities,” he said.

“We see the same type of fiscal stability in the Gulf of Mexico – we don’t see the same in other regions such as Africa and therefore we’re not active in Africa.

“We want to be in countries where there is that stability to make sure that the investment decisions make sense.”

His comments come as ministers come under growing pressure to hit oil and gas producers with a windfall tax to ease the pressure for households from rising energy bills. Rishi Sunak, the Chancellor, is thought to be warming to the idea following weeks of pressure from political opponents.

Both he and Kwasi Kwarteng, the Business Secretary, have told producers they need to plough profits from rising energy prices back into UK production.

Ithaca is one of the largest North Sea producers after spending billions in recent years, including buying US giant Chevron’s North Sea business in 2019.

It has just paid $1.5bn (£1.2bn) for rival Siccar Point Energy including its interests in the Cambo, Schiehallion, Mariner and Rosebank fields, the four largest UK assets by remaining reserves.

Cambo is facing uncertainty after oil and gas giant Shell pulled out last year citing potential delays, amid rising opposition to oil and gas projects before the Cop26 climate change conference. Shell is reportedly re-examining its decision. Mr Myerson said: “Any type of investment needs to ensure we can pay that investment back over time.”

Mr Kwarteng is opposed to a windfall tax, and has said Conservative MPS will be ordered to vote against it in Parliament today.