Shell PLC (LSE:SHEL, NYSE:SHEL) has called for a price backstop to give it a buffer in case oil and gas prices drop sharply and said it is reviewing its £25bn North Sea investment plans after last week’s windfall tax increase.
The FTSE 100 giant has seen huge cash inflows due to the elevated prices of oil and gas and with its latest results announced a US$4bn share buyback and 15% dividend hike.
Even so, David Bunch, head of Shell UK, told the Confederation of British Industry's annual conference in Birmingham that it was “going to have to evaluate each [North Sea] project on a case-by-case basis," going forward.
"When you tax more you're going to have less disposable income in your pocket, less to invest," he said.
UK chancellor Jeremy Hunt upped the windfall levy on North Sea production to 35% from 25% in his Autumn Statement while also extending its duration to 2028 from 2025.
The Treasury predicts the Energy Profits Levy will raise £40bn but it lifts the effective tax rate on North Sea production to 75%, among the highest in the world.
As a trade-off, when he introduced the levy, the then chancellor - and now prime minister - Rishi Sunak announced new North Sea developments would get 91% tax relief.
Shell wants similar tax breaks for renewable energy such as wind generation, hydrogen and carbon capture technology, areas where it is increasingly focusing its efforts for the future.