Gas crisis: UK mulls windfall tax on energy groups as gas producers to see soaring profits

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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.


READ: Gas crisis: Igloo Energy faces collapse as government mulls nationalisation of Bulb


“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.


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.


Chrysaor and Premier, Total, BP PLC (LSE:BP.), Energean PLC (LSE:ENOG) and Spirit Energy are other key players in the North Sea.


Shares in Shell added 2% to 1,525.20p on Wednesday afternoon.

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