Energy major BP has clarified its investment plans for the North Sea by saying that they will not be negatively affected by the energy profits levy that was introduced by Rishi Sunak, the previous Chancellor, in May.
While BP CEO Bernard Looney was originally dismissive of suggestions that a windfall tax would affect its planned £18 billion of investment in the UK, the news that the tax could remain in force for some years – until 2025 or when energy prices fall to historically typical levels – prompted the company to signal that it may need to appraise its investment decisions after all.
Speaking to the environmental audit committee, BP’s boss for the UK business, which includes the Castrol lubricant brand, Louise Kingham, said that subsequent clarification that the levy will end by December 2025 had provided the certainty the company needed to move ahead with its investment plans. She said that there was still some “vagary” about the pricing levels that would trigger the end of the levy, adding:
“I think that will still hinder some in trying to do the detailed economics for their investment plans. What we know now without all of that clarity is that we don’t think at BP that the profits levy will impact on the investment plans we have in the North Sea.”
Kingham also said that while the investment allowance included in the levy may bring some projects forward by a few months, it was hard to radically accelerate such complex projects.