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BP pays tax again on North Sea production

According to BP’s latest report on payments to governments, BP’s North Sea oil and gas business again became a net payer of tax in 2021, with it paying almost £100 million to HMRC.

Reports on payments to world governments for extractive businesses have been a regulatory requirement for some years. In the report, BP says about this:

“BP supports transparency in the flow of revenue from oil and gas activities to governments. This helps citizens hold public authorities to account for the way they use funds received through taxes and other agreements.”

It has become common to see North Sea producers not pay any tax on their upstream North Sea operations in recent years. Low oil prices in some years, especially during the pandemic, made North Sea operations much less profitable. Aging fields also limit production, and the infrastructure for depleted fields needs to be decommissioned, which can be extremely costly.

BP, the owner of the Castrol lubricant brand, received a tax refund of around £34 million in 2020 due to decommissioning costs, although that figure is limited to tax payments related to BP’s extractive activities in the UK. In a separate report for the wider business, BP’s total tax payment is indicated at around £215 million, mostly for employer and corporate taxes.

Despite the new energy profits levy, which is commonly referred to as a windfall tax, BP CEO Bernard Looney has committed to continue its planned investments in the UK.

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