BP, Royal Dutch Shell Group and other oil companies will pay eight billion pounds ($11.6 billion) in new taxes over the next eight years under UK tax levies that were announced last month, an industry group has said, the figure almost doubles BP's own estimate.
The increased cost threatens to cut investment in North Sea oil and gas by as much as twenty percent, risking fifty thousand jobs and accelerating a decline in output, the UK Offshore Operators' Association said. The CEO of BP John Browne told Parliament last month producers will likely pay 600 million pounds a year due to the extra tax.
“There will be projects that will be canceled,” said Nick Fairbrother, managing director of UK business for Amerada Hess, at a briefing for reporters. “There will be exploration wells that won't be drilled.”
Britain’s Prime Minister Tony Blair's April budget raised taxes on North Sea oil for the first time in twenty years. The move was a surprise to the oil industry, which had fought off earlier government moves to tap into its coffers.