The UK government is considering a windfall tax on companies profiting from the gas crisis as the sector is tipped to see profits soaring.
Business secretary Kwasi Kwarteng didn’t rule out an extra levy as it’s being implemented elsewhere in Europe.
“I think what they’re doing in Spain is recognising that it’s an entire system, the energy system is an entire system. I’m in discussion with Ofgem and other officials, looking at all options,” he told reporters.
Asked again whether the government has considered or ruled out a windfall tax, Kwarteng says: “I am not a fan of windfall taxes, let me just get that straight, but of course it’s an entire system and we have to think about how we can get the system as a whole to help itself.”
— Emily Gosden (@emilygosden) September 22, 2021
According to Barclays, gas producers are set to benefit from the situation, “with every US$1 per million British Thermal Units (mbtu) equivalent to 7% of our 2022 forecasts”.
“On this basis and plugging in the forward curve, we now see potential upgrades to consensus of 50%, taking industry earnings back to 2008 levels, enabling even more free cash flow for share buybacks,” analysts said.
The UK gets most of its gas from offshore projects in the North Sea and Norway, alongside a handful of onshore sites.
Royal Dutch Shell plc, which recently agreed to sell off its Permian Basin assets to make the company greener, extracted 65bn standard cubic feet of natural gas from the UK and 187bn from Norway, as part of 301mln in total in Europe during the whole of 2020.
In the half-year to 30 June, it had 4.6bn of standard cubic feet per day available for sale across the world.
Shares in Shell added 2% to 1,525.20p on Wednesday afternoon.