- Chancellor Rishi Sunak will begin talks with the oil and gas companies to get their support on the windfall tax.
- The energy sector has been criticising the recently adopted windfall tax saying that the investment into domestic green sources of energy may suffer.
Chancellor Rishi Sunak will begin a charm offensive as he visits Aberdeen on Thursday to get the support of the oil and gas companies over the recently implemented windfall tax. The levy was unveiled last month with an aim to raise £5 billion by implementing additional taxes on the profits generated by the North Sea oil and gas producers.
The idea was to channelise these bumper profits towards offsetting the soaring energy bills faced by UK households amid the spiralling cost-of-living crisis.
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The energy firms have been making huge profits with the tightening of oil and gas supplies boosting the fuel prices. The Russia-Ukraine war has further increased the revenues of the oil and gas businesses by pushing up fuel prices globally. The energy sector has been criticising the windfall tax saying that the investment into domestic green energy sources would be dampened due to the levy.
The companies are getting an investment allowance under the levy. For every £1 a company spends on investment, it gets 91p in tax savings. Responses from the energy companies on the levy consultation would be accepted till 28 June. It is expected that the investment allowance would be backdated to the beginning of 2022 instead of May.
It is also expected that the Boris Johnson Government would review the sunset clause regarding ending the levy when the market bounces back to normalcy or by the end of 2025.
The meeting is likely to be attended by the biggest North Sea drillers, Shell, BP, and Harbour Energy. Let’s look at their share prices.
Shell plc (LON: SHEL)
The shares of the oil and gas giant, Shell plc, were down by 1.40% at 8:12 AM (GMT+1) on 23 June 2022, at GBX 2,047.00. The FTSE 100 index constituent has provided its shareholders with a return of 41.04% over the last one year as of 23 June 2022, while its year-to-date return stands at 26.52%. Shell currently holds a market cap of £153,408.05 million.
BP plc (LON: BP.)
The shares of the oil and gas supermajor, BP plc, were down by 1.34% at 8:15 AM (GMT+1) on 23 June 2022, at GBX 378.15. The FTSE 100 index constituent has provided its shareholders with a return of 17.32% over the last one year as of 23 June 2022, while its year-to-date return stands at 14.52%. BP currently holds a market cap of £73,781.41 million.
Harbour Energy plc (LON: HBR)
The shares of the greatest North Sea operator, Harbour Energy plc, were down by 1.15% at 8:17 AM (GMT+1) on 23 June 2022, at GBX 343.00. The performance of the FTSE 100 index constituent has been deteriorating, with its returns on a one-year and year-to-date basis standing at -18.29% and -2.82%, respectively. Harbour Energy currently holds a market cap of £3,201.36 million.