Windfall tax will hurt UK’s climate ambitions, oil boss warns
The windfall tax will gradually make the UK more reliant on carbon-intensive imports to meet its energy needs and put the country’s environmental goals at risk, the boss of a leading oil and gas producer has argued.
Gilad Myerson, executive chairman of Ithaca Energy, told City PM that the Energy Profits Levy was not harming international oil majors, which generate revenues across multiple continents, but was instead directly impacting independent UK domestic oil and gas operators.
“Because of the windfall tax, we’ve seen a significant reduction in investment in the UK North Sea and accelerated decline in production, which will only lead to higher UK energy prices. This will exacerbate the cost-of-living crisis and further hamper the UK’s sluggish economic recovery,” Myerson said.
Ithaca is currently looking to invest $8-10bn to develop new projects in British waters, including its 20 per cent stake in Rosebank – the largest undeveloped field in the North Sea.
The project is yet to be approved by regulators, and Myerson was not prepared to commit to developing Rosebank without assurances from The Treasury about the regulatory and investment climate.
Myerson still hoped to “receive the necessary support” from the government to go ahead and make the final investment decision on Rosebank.
Rosebank has been a lightning rod for criticism from green groups and environmentalists.
However, Myerson argued there was a strong environmental case for developing Rosebank and other North Sea projects, due to its lower carbon intensity compared to alternatives such as overseas supplies and LNG.
“Ultimately, in the UK, we will have trucks for many years to come. The truck drivers, whether they Ocado truck drivers, Tesco truck drivers, or Amazon truck drivers delivering goods to homes, they will need to get diesel. Diesel will either need to come from the UK North Sea or it will need to be imported,” he said.
He revealed the average emissions profile of a UK oil field is 20kg of CO2 per barrel, while importing oil from overseas – such as US LNG – can be up to 50kg of CO2 per barrel.
“If you just look at the numbers, it should be very clear to everyone that it’s better to develop our own energy rather than import energy and therefore it’s important that any type of fiscal regime should be supportive of developing energy in our own in our own market,” he said.