The government's decision to raise the windfall tax on oil and gas companies prompted Shell to announce on Monday that it will review its plans to invest up to 25 billion pounds in Britain over the next ten years.
At the Confederation of British Industry's annual conference in Birmingham, Shell's UK country head David Bunch said, "We're going to have to evaluate each project on a case-by-case basis." One will have less spare income in the pocket and less to invest when increasing taxes.
In response to rising energy prices, British Finance Minister Jeremy Hunt last week revealed proposals to raise a windfall tax on North Sea producers from 25% to 35% in order to close a significant funding gap.
The tax, which was also postponed from the end of 2025 to the beginning of 2028, is expected to bring in 40 billion pounds, according to the government.
The Energy Profits Levy (EPL) tax will raise the sector's overall taxes to 75%, which is among the highest in the world. Nevertheless, it permits tax deductions for the majority of investments made in new oil and gas developments.
The EPL should be created to offer incentives to solve shortfalls in the oil and gas supply as well as longer-term investments in renewable energy, according to a statement released by Shell on Monday.
According to Shell, the EPL should be expanded to include investments in wind energy, hydrogen, and carbon capture technology in order to achieve that goal. It should also contain a "price backstop" in case oil and price drops suddenly.
Earlier this year, Shell declared its intention to invest 20 to 25 billion pounds over the following ten years in Britain's energy infrastructure, which includes hydrogen, offshore wind, oil and gas, and electric vehicle charging stations.
Shell stated that after a period of "great uncertainty," the energy sector "needs to have confidence that there will now be a stable investment climate."