Higher taxes under Labour 'risks throttling future energy projects'

Higher taxes under a Labour government would risk throttling investment in future energy projects, the boss of Shell warned yesterday.

CEO Wael Sawan was speaking after the group announced adjusted earnings of £7.66billion for the first quarter of this year.

He said energy companies like Shell will be a big part of helping the world decarbonise, but they needed the right ecosystem.

Mr Sawan added: “I would hope any government coming in would see that and support that.”

He was responding to comments by Labour’s shadow chancellor Rachel Reeves and shadow energy secretary Ed Miliband, who both called for higher windfall taxes on energy companies earlier yesterday.

The Telegraph says Ms Reeves accused the Conservatives of refusing to “bring in a proper windfall tax on oil and gas giants”.

Windfall tax

Mr Miliband, meanwhile, said: “It is staggering that Rishi Sunak and the Conservatives refuse to implement a proper windfall tax to make the energy companies pay their fair share.

“Labour would bring in a proper windfall tax on oil and gas giants to freeze council tax this year.”

Shell’s Q1 profits beat forecasts, and – as expected - led to the fresh calls from Labour for even-higher windfall taxes on UK North Sea oil and gas producers.

However, the comments from Ms Reeves and Mr Miliband defy logic, as oil and gas prices continue to tumble.

The justification for Chancellor Jeremy Hunt continuing to target the North Sea with a total tax rate of 75% is crumbling week-by-week.

Market watchers also point out that Labour politicians and others pushing for higher taxes on UK-based international energy groups like Shell don’t seem to understand that their profits generated abroad aren’t subject to the windfall levy imposed by the British Government.

'Hurt the pipeline'

Asked about Ms Reeves’ and Mr Miliband’s comments, and whether Shell felt threatened by a Labour government, Mr Sawan suggested that imposing higher taxes now would hurt the pipeline of future energy schemes.

He said it was “important to recognise” that investments being made by the company today would often not provide returns until a decade later.

Mr Sawan, who took over as chief executive in January, added: “Governments rightly have to do what they need to do. But I think governments are also conscious of the important role that companies like ours play in investing in the fundamental infrastructure in the countries.

“I think we have a lot that we can continue to offer the UK. These projects we are producing today; we bring in liquefied natural gas to be able to supplement the needs of the UK: we are a big, big investor in many of the low carbon and zero-carbon opportunities here…we’re looking at a carbon capture and storage project.

“So companies like ours are a big part of how we can potentially help the world decarbonise, with the right ecosystem to be able to do that. And I would hope any government coming in would see that and support that.”

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