Neptune warns on ‘poorly’ directed oil taxes

OIL and gas independent Neptune Energy has warned that new projects planned for the UK and elsewhere are at risk from “poorly targeted” windfall taxes.

Publishing third quarter results hours ahead of confirmation that windfall levies on extraction in the UK are set to rise from 25 to 35 per cent, Neptune chief executive Pete Jones said the company’s output is set to rise next year following more than $4 billion of investment since 2018. The group – which runs its UK operations from Aberdeen – expects to invest about $260 million in the UK this year, rising by 50% in 2023 as it ramps up its Seagull and Isabella developments in the North Sea.

“We have been maturing new development opportunities across our global portfolio, however, some of these opportunities are at risk from potentially poorly targeted windfall taxes, particularly in the UK, Germany and the Netherlands,” Mr Jones said.

“Neptune is supportive of a fair level of taxation, but mechanisms must not discourage investment in incremental production to support energy security priorities, as well as carbon reduction initiatives.”

Neptune is the latest in a string of offshore companies to report surging profits on the back of huge increases in gas prices and higher production volumes.

The company, which is backed by private equity, reported global pre-tax profits of $935.8m during the third quarter of this year, up from $417.4m in the same period a year earlier. Revenues nearly doubled to $1.26bn.

Seagull is a tie-back to the BP-ETAP hub in the central North Sea, and is on course for first oil in mid-2023. The project has estimated proven and probably reserves of 50 million barrels of oil equivalent (boe).

Isabella – described as a “high-impact discovery” – is operated by Totalenergies. Appraisal drilling is underway there with final results expected in the second quarter of next year.