UK oil and gas giant cuts investment due to windfall tax

British oil and gas producer Ithaca Energy has recently reduced investment and postponed some oil and gas projects this year and next due to the UK government imposing a windfall tax on the oil and gas industry.

The windfall tax,also known as the energy profit tax,has forced many oil and gas companies operating offshore in the UK to reduce investment and review projects.After the UK raised the windfall tax to 35%at the end of last year,Seaport Energy,the largest oil and gas producer in the North Sea region,withdrew from the latest round of licensing bidding.Shell stated that it will reassess each project,including a planned investment of$30.5 billion in the UK energy sector.Total Energy has stated that it will reduce its investment in the UK by 25%.

In its first half performance report,Ithaca Energy Company stated that”prior to the improvement of the fiscal system,investment has decreased and some projects for this year and next will be postponed or cancelled,which will affect the medium-term oil and gas production prospects.It is expected that oil and gas production will be lower next year than this year.

Seaport Energy Company recently stated that due to the high profits tax in the UK and the decline in fossil fuel prices,the company suffered a loss of$8 million in the first half of the year.Last year,the company’s after tax profit was close to$1 billion.