Oil & Gas

North Sea firms chasing price floor to offset windfall tax

UK oil and gas producers are lobbying for a price floor to be introduced to combat the negative impacts of the latest windfall tax, according to reports.

Reuters is quoting executive and industry sources who claim companies are finding it difficult to access funding as a result of Westminster scaling up its levy on the sector.

And that could taper investments in fresh North Sea projects, stunting efforts to domestic improve energy security.

In November’s autumn budget, Chancellor Jeremy Hunt upped the headline rate of tax on the UK oil and gas sector by a further 10%, taking it to 75%.

It followed the original energy profits levy in May that slapped an additional 25% on the sector, as government tried to stump up cash to address the cost-of-living crises.

Crucially, the tax was also extended until 2028, and a sunset clause, which would have seen the policy dropped if oil prices fell to around $70 a barrel, was shelved.

Reuters reports that senior figures within industry say banks are cutting their “credit facilities” by around 40% as a result of the fiscal fluctuations.

North Sea producers will meet with government representatives on Friday to discuss the windfall tax, sources told the news agency.

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