Shell calls for ‘certainty’ after Labour increases oil and gas windfall tax

Shell’s finance chief has called for “certainty” on the Government’s oil and gas policy, the day after Labour confirmed plans to raise a windfall tax on North Sea oil and gas firms.

Chancellor Rachel Reeves said she would increase the tax, known as the energy profits levy, to 38% from 35% in the autumn Budget.

Shell’s Sinead Gorman said on Thursday: “Elected officials just have to balance budgets in the best way they see fit.

“We have to look for policies that provide certainty… We invest over the long term.

The windfall tax applies to profits made from extracting UK oil and gas, and was initially set at 25% before Conservative chancellor Jeremy Hunt increased it to 35% in 2023.

Now Labour has raised it again, with plans to use the revenue to help pay for new renewable energy projects.

Ms Reeves also scrapped a 29% investment allowance, which means companies can offset tax from money that is reinvested.

Ms Gorman was commenting as Shell’s profits came in higher than market forecasts last quarter, after it made more money from its gas business than people had expected.

The energy giant said adjusted earnings were 6.03 billion US dollars (£4.64 billion), comfortably beating analysts’ consensus of 5.36 billion dollars (£4.13 billion).

Gas production was up 4.5% on the same period last year, while liquefaction volumes – turning natural gas into liquid – were up 9%.

Total earnings still nudged down 3.1% versus last year, amid what Ms Gorman called a “less favourable” macroeconomic environment more broadly.

Brent crude prices remain significantly down over the last six months, and weaker demand for oil worldwide has hit margins at Shell’s refineries.

Refining is “a bit more difficult at the moment. We’re definitely seeing a period of rebalancing in all the energy markets,” she said.

However, Shell said it would give more returns to investors by buying back a further 3.5 billion dollars (£2.69 billion) of its shares.

It marks the twelfth consecutive quarter that Shell has rewarded shareholders with more than three billion dollars (£2.31 billion) in buybacks.

On Thursday, protestors from climate group Fossil Free London gathered – dressed in Halloween costumes – outside Shell’s London office near Waterloo.

Shell has weakened several carbon reduction targets earlier this year, following other oil and gas giants in placing higher emphasis on financial returns amid pressure from investors.