Shell will review £25bn of investments in British projects after the chancellor extended the windfall tax on energy companies, its UK chairman has told Sky News.
David Bunch said the oil giant would re-examine each of its projects on a “case-by-case basis” after Jeremy Hunt increased the levy on “excess” oil and gas profits from 25% to 35% in last week’s autumn statement.
The measure takes the total tax paid on oil and gas profits to 75%, though fossil fuel companies are able to claim relief against investments.
Shell announced a £25bn programme of investment five months ago but Mr Bunch said the government’s move, intended to help fund energy support and balance the national balance sheet, meant it would be re-examined.
“We outlined an investment package five months ago of £25bn, and the one thing I said was we really need a stable fiscal environment to make sure we can get that investment out of the door,” he said. “Since then we have had three budgets, a couple of prime ministers, so it’s welcome to see some stability.
“But we are going to have to look at each of those projects on a case-by-case basis and re-evaluate them, based on the current fiscal outlook, and that will determine whether or not we invest to the amount we previously discussed.”
Mr Bunch called on the government to set out how the windfall tax might be withdrawn if and when prices return closer to historical norms.
“As the UK’s biggest company we need to do our part. We understand the need that is out there, and I think we understand the nature of the windfall tax.
“However, the current design of the windfall tax does not have an off switch. It doesn’t have a price point at which that windfall tax turns off. That is something we would like to talk to the government about.
“We are still incredibly committed to the UK, it’s a great market, we’re the biggest company, we put out a great investment programme, I’d really like together with what we heard today from Rishi to help create that environment so we can help build a sustainable energy future, but doing that is going to need a few different levers.”
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Windfall tax on oil giants’ profits
Oil and gas companies have benefitted from elevated prices driven by demand and latterly the war in Ukraine, and were hit by the first iteration of the windfall tax at 25% in March by then-chancellor Rishi Sunak.
The company sparked calls for a review last month when it revealed its UK arm had paid zero windfall tax despite recording global profits of £26bn because of relief covering drilling projects in the North Sea.
Mr Bunch also revealed that Shell will not be accepting any energy support from the government for any of its businesses despite the current scheme, which ends in April, being available to companies of any size.
“We won’t accept any business energy support from the government, I don’t think anyone would expect us to but that’s clearly the right thing to do, and I think that support has to be very much targeted to those who really need it, both business and consumers.”