Total Energies slashes £100m from North Sea plans after windfall tax

Total Energies plans to cut its investment by a quarter next year, after the Government tightened the windfall tax last month.

The boss of the French super-major confirmed to industry publication Energy Voice it will slash £100m from its North Sea investment plans for 2023.

The group is concerned about the tax and lack of a price floor, meaning the Energy Profits Levy stays in place even if oil and gas prices recede close to conventional trading levels.

Jean-Luc Guiziou, managing director, said: “Following another change to the fiscal environment for energy investors in the UK, we are now evaluating the impact of this change on our current and planned projects.

“We note that without a price floor to the EPL, the current regime will affect short-cycle investments, in particular infill wells,” he noted. For 2023 alone, our investments will be cut by 25 per cent.”

City A.M. has approached Total Energies for comment.

Jeremy Hunt hiked the Energy Profits Levy during the autumn statement by10 percentage points to a total of 35 per cent, and has extended its reach until 2028.

Oil and gas firms will have to pay 75 per cent on profits until the end of that year, raising £40bn for the Treasury as it grapples with a cost-of-living crisis and record energy bills.

The tax also includes investment relief of 91p in the pound for companies that invest sufficiently in domestic projects.

However, Total Energies appears to favour reducing investment and taking the hit from the tax than risking higher amounts of capital in the North Sea.

This follows fresh warnings from industry body Offshore Energies UK that the latest changes to the windfall tax have made rates “so high that it threatens to drive investment out of the UK altogether.”