Taxes on super profits: Total is reducing its presence in the UK

The French group TotalEnergies has announced that it will cut its planned investments in the British North Sea by a quarter next year, after London increased an extraordinary tax on the energy giants’ record profits.

TotalEnergies is “assessing the impact on its current and planned projects” of a “new change in the tax environment” in the United Kingdom, said Jean-Luc Guiziou, head of the group’s UK exploration and production subsidiary. , in a statement sent to AFP on Friday.

“For the year 2023 alone, our investments will be reduced by 25%,” continued Mr. Guiziou, confirming comments published Thursday in Energy Voice. This is £100m less than previously planned for next year.

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The British government announced at the end of November that an energy surplus tax introduced in May would rise from 25% to 35% and be extended for three years until 2028. London thus intends to involve companies that have seen their profits soar with the energy boom since the start of the war in Ukraine.

The ability to reduce this tax in return for investment, much criticized by environmentalists, is maintained, but it is now much more of an incentive for low-emission projects and less for oil and gas projects.

Such a tax was vociferously demanded by NGOs and the Labor opposition, but the Conservative majority resisted for a long time, fearing it would discourage investment in the sector amid the energy crisis, before giving in to the need to fill the coffers.

A tax to “support vulnerable people”

This “is in line with other European countries, such as Italy”, a UK government spokesman argued on Friday, while Rome recently announced an identical increase in the taxation of energy giants’ “super profits”.

While investment is “every company’s choice”, the UK Government believes it is only fair that those with the broadest shoulders contribute the most so we can continue to support the vulnerable”, he said. – he adds.

Among the investments that TotalEnergies has abandoned is notably a project in the Elgin field, off Aberdeen, in Scotland, for an “infill well”, a borehole added to existing wells to improve the recovery of hydrocarbons.

6.6 billion in profit

Other energy companies have announced that the increase in this tax will force them to review their investments in the country, as has Shell. However, the head of the British giant Ben van Beurden had assessed in October that a greater contribution from the sector to the protection of the households most affected by the energy increase was “a social reality” that had to be “accepted”.

The European Commission launched at the end of September a “temporary solidarity contribution” on the profits of energy groups, set at 33% of the share of the 2022 profits, more than 20% higher than the average for the years 2019-21.

TotalEnergies, which announced a new record third-quarter profit of $6.6 billion, estimates it would have to pay one billion euros in six EU countries in 2022 if this contribution were applied everywhere.

In France, the Senate again rejected at the end of November a taxation of “super profits” aimed at large companies, but the European contribution, specifically aimed at the energy sector, was translated into the draft 2023 budget, which is currently under examination.

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