Sunak urges banks to keep funding oil and gas firms after windfall tax

Rishi Sunak has asked Britain’s biggest banks to keep the money taps flowing to the oil and gas sector after slapping it with a windfall tax.

In a bruising meeting in Aberdeen on Thursday, the chancellor told oil and gas executives he is trying to ensure investment in their businesses is not curtailed.

Sunak visited the Scottish oil industry hub to discuss Britain’s energy security and the energy profits levy. The tax on excess North Sea profits was introduced last month in an attempt to raise £5bn to cut household bills.

But oil and gas companies including BP and Shell have warned the levy could hit investment into renewable energy.

Sources who attended the meeting at the Net Zero Technology Centre said Sunak told those assembled he asked lenders to ensure oil and gas companies had access to capital.

It is understood participants, who included executives from BP, Shell, Harbour Energy and Ithaca Energy, raised a string of concerns over the tax during the hour-long meeting.

An Ithaca Energy executive told the chancellor that the windfall tax had made its planned investments into the Cambo, Rosebank and Marigold fields more complex.

One attendee said: “He arrived at the meeting bright eyed and bushy tailed and left with his tail between his legs. It would have been a chastening experience.”

The windfall tax was only implemented after a U-turn by Sunak and Boris Johnson, who had argued it would hit investment.

It is understood Sunak told executives he did not see the levy as a “permanent fixture”. The tax is expected to be in place until normal market conditions return to the oil and gas sector or by the end of 2025. The Guardian revealed this week Harbour has lobbied the government to bring this date forward by two years.

Executives want the government to commit to a timetable to review market conditions and for an investment allowance included within the levy to be backdated to cover projects that have already been invested in but are yet to produce oil and gas. They also want decommissioning costs to be included within the allowance.

After meeting executives, Sunak later addressed younger members of the industry in a Treasury Connect event, discussing jobs and the future prospects while holding a mug adorned with the Scotland flag.

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Separately on Thursday, the business secretary, Kwasi Kwarteng, laid out his plans to ensure Britain has enough domestic energy for this winter. In a speech at the Chatham House Second Century London Conference, he said talks were under way to keep coal plants in Yorkshire and Nottinghamshire open for longer.

European countries are scrambling to replace Russian gas as Vladimir Putin turns the screw on foreign energy supplies. Kwarteng said: “We cannot – and will not – be blackmailed by dictators with their hands on the gas taps.”

The Treasury declined to comment.

The Guardian

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