UK plans one-off tax on energy companies as gas producers see profits soar
Upstream energy companies are expected to see their profits soar along with the price of gas
The British government is considering a one-off tax on companies profiting from the gas crisis as the sector is expected to see its profits soar.
Business Secretary Kwasi Kwarteng has not ruled out an additional tax as it is being implemented elsewhere in Europe.
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“I think what they are doing in Spain is recognizing that it is a complete system, the energy system is a complete system. I am in discussions with Ofgem and other officials, examining all options, ”he told reporters.
Asked again whether the government has considered or ruled out a one-off tax, Kwarteng replies: make the system as a whole help itself. “
– Emily Gosden (@emilygosden) September 22, 2021
According to Barclays, gas producers should take advantage of the situation, “with every US dollar per million British thermal units (mbtu) equivalent to 7% of our 2022 forecast”.
“Based on this and plugging the forward curve, we are now seeing potential improvements to the consensus of 50%, bringing industry earnings down to 2008 levels, allowing even more free cash flow for share buybacks. “the analysts said.
The UK gets most of its gas from offshore projects in the North Sea and Norway, as well as a handful of onshore sites.
Royal Dutch Shell plc, which recently agreed to sell off its Permian Basin assets to make the company greener, has extracted 65 billion cubic feet of natural gas from the UK and 187 billion from Norway, as part of the 301 million in total in Europe throughout the year 2020.
During the six-month period ended June 30, it had 4.6 billion standard cubic feet per day available for sale globally.
Chrysaor and Premier, Total, (), () and Spirit Energy are other key players in the North Sea.
Shell shares rose 2% to 1,525.20p on Wednesday afternoon.