BP to review investments after UK plans windfall tax

UK energy giant BP said it would review its North Sea investments after the government unveiled a windfall tax on oil and gas producers.

Chief executive Bernard Looney had said a levy would not hit BP’s investment pipeline, contrary to assertions by the UK government, which was desperate not to introduce a tax until public pressure and the cost-of-living crisis forced its hand.

“Today’s announcement is not for a one-off tax – it’s a multi-year proposal. Naturally, we will now need to look at the impact of both the new levy and the tax relief on our North Sea investment plan,” the company said after the market closed on Thursday.

Finance Minister Rishi Sunak has proposed a 25% tax increase in a move that is expected to raise £5bn.

However, a clause in the planned legislation means that the levy will only be phased out when oil and gas prices return to historically more normal levels or by December 2025.

Looney earlier this month that none of BP’s planned £18bn UK investments would be mothballed if a windfall tax were introduced.

The government was split over whether to tax oil and gas companies, whose profits have surged as the war in Ukraine forced crude prices to $120 a barrel at one point.

Sunak wanted to introduce the tax, but was rebuffed by Prime Minister Boris Johnson who claimed it would deter investment.