Windfall levy rise ‘threatens North Sea investment’

RISHI SUNAK’S tax raid on oil and gas companies risks damaging investment in the North Sea, one of the basin’s largest drillers has warned.

Amjad Bseisu, the chief executive of Enquest, said the increase in the windfall tax on the sector was “particularly disappointing” at a time when ministers are also keen to boost power supplies.

However, he stressed Enquest remained “committed” to the North Sea as he announced a 5.2pc increase in overall group production, to 46,593 barrels of oil equivalent per day.

High oil and gas prices triggered by Russia’s war on Ukraine have led to a cost of living crisis, prompting Mr Sunak to increase the tax rate on North Sea producers when he was chancellor in May. Last week, his administration increased the windfall tax rate, from 25pc to 35pc, and extended its lifetime from 2025 to 2028. The Government is trying to find cash to help subsidise household energy bills and spending.

The move means North Sea producers now face a total tax rate of 75pc – its highest so far and among the costliest in the world. It triggered a pushback from companies operating in the North Sea.

Offshore Energies UK, the trade group, said it risked forcing companies to reconsider investment plans worth billions. Deirdre Michie, chief executive, said the “onus is now on the Government to help build back investor confidence”.

Enquest operates in the UK and Malaysia, producing 39,387 barrels of oil equivalent per day from the UK in 2021. In September, it announced doubling of half-yearly profits to $416m (£360m). In a update yesterday, it highlighted “good production performance” since the start of the year.