Risi Sunak announced last month an unexpected tax on oil and gas companies making big profits during the energy crisis, which he hopes will raise 5 5 billion to fund efforts to cut household bills. In a letter to Sunak, seen by the Guardian, Harbor Energy CEO Linda Cook called on the chancellor to urgently review the EPL proposals. The government hopes to implement a bill by early July. Mr Cook said: “While assessing the scale of the cost-of-living crisis in the UK, the EPL as currently proposed is United Kingdom energy supply. “ Cook asked Sunak for a “gateway approach” where the levy only applies to “companies that have actually made unexpected profits”. Harbor, which pumps about 200,000 barrels of oil a day, was created by the merger of the privately held North Sea-based mining company Chrysaor and the heavily indebted peer Premier Oil. Cook argues that the impact of the levy on smaller specialist exploration and production companies is “disproportionately large compared to the projected impact on large oil companies such as BP and Shell”. Harbor’s share price had jumped more than 40% since the beginning of the year as investors bet on oil and gas companies. However, since April all these profits have been eliminated as the unexpected tax destroyed the investment climate. Cook estimated that the UK’s largest independent producers – including Harbor, NEO, Ithaca and Spirit – would pay more than δι 2.5 billion. The levy will result in energy companies paying an additional 25% tax, but Sunak has allowed companies to save 91p tax on every λί 1 invested in the North Sea. The tax will be valid until the “normal” oil and gas prices return or until the end of 2025. Companies are not allowed to reduce the tax with losses from previous years or money spent on the decommissioning of North Sea oil rigs. Cook asked Sunak to “allow the clearing of tax losses from previous investments. “If this is not done, the contribution, in essence, is retroactive and punishes those who invested when commodity prices were lower.” He added: “Do not rule out decommissioning costs for EPL purposes. We are legally obliged to undertake the decommissioning at the required time and its financing in parallel with the EPL results in less available funds for investment “. Cook asked Sunak to consider changing the expiration clause at the end of 2023. A number of smaller players have set up businesses in the North Sea, buying obsolete assets from major oil companies such as BP and Shell in recent years. BP CEO Bernard Looney has been accused of pushing the government to introduce the tax, acknowledging that the tax would not hurt investment, a key argument originally made by ministers against its introduction. Ever since Sunak announced the plan, BP and Shell – whose profits have skyrocketed this year – have warned that the tax could hurt investment. Subscribe to the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk Harbor said it had invested ,5 8.5 billion in the North Sea, including the Tolmount offshore gas field off the coast of Yorkshire, over the past five years and had plans to invest an additional ,5 2.5 billion between 2022 and 2024. Cook said Harbor’s hedging arrangements meant that “we are not fully aware of the benefits of recent high prices, unlike large oil companies that usually do not hedge and have large commercial entities.” The Guardian revealed earlier this month that the executives of the 10 largest North Sea operators received a total of ,4 54.4 million £ in the last financial year reported, up from ,4 29.4 million last year. In it, Cook received a “gold hello” of ,6 4.6 million as part of the 6 6 million salary package. The Ministry of Finance is consulting separately on the plans to hit the electricity producers with an unexpected tax.
