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. Total Energy “assesses the impact on its current and planned projects” of one “new changes in the tax environmentin the United Kingdom, Jean-Luc Guiziou, head of the group’s British exploration and production subsidiary, said in a statement sent to AFP on Friday.
“For 2023 alone, our investments will be reduced by 25%“, continued Mr Guiziou, confirming comments published on Thursday in Energy Voice. This is £100m less than previously planned for next year. The British government announced at the end of November that a tax on energy surpluses, introduced in May, would rise from 25% to 35%, and be extended for three years until 2028. London thus intends to involve companies, who have seen their profits rise with the energy boom since the start of the war in Ukraine. The option 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, 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 for fear of discouraging investment in the sector amid the energy crisis, before relenting, faced with the need to fill the state coffers .
Other companies implement the tax increase
Among the investments that TotalEnergies has abandoned is notably a project in the Elgin field off Aberdeen in Scotland by “fill well“, a well added to existing wells to improve the recovery of hydrocarbons. Other energy companies have announced that the increase in this tax will force them to review their investments in the country, as has Shell. The boss of the British giant, Ben van Beurden, had nevertheless assessed in October that a major contribution of the sector to the protection of the households most affected by the energy increase was “a social reality“who should have”accept“. The European Commission, for its part, launched at the end of September atemporary solidarity contributionon energy groups’ profits.
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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, dominated by the right-wing opposition, rejected the introduction of such a tax at the end of November.