LONDON, May 5 (UPI) -- A tax increase for energy companies working in the North Sea is needed to help address budget issues, the British energy secretary said.
British Energy Secretary Chris Huhne defended his government's decision to enact a new tax scheme for work in the offshore sector. Treasury officials said the increase was necessary to transfer some of the funds generated by rising oil prices to the public.
The decision to raise the tax also helps the British government tackle a budget deficit.
"It was absolutely essential that we got a grip on the public finances, as otherwise we would have remained in the danger zone," Huhne was quoted by the Financial Times as saying.
Major energy companies working in the region said the tax burden dragged on their profits while others said they were having a tough time selling North Sea fields because taxes make the region unattractive.
Paul Warwick, the head of British and African development for ConocoPhillips, said the tax burden would impact the boom expected from regional energy reserves.
"Now if we're hit with another tax increase that takes another 24 percent of its value away, it's difficult to see how that renaissance can go on," he was quoted as saying. "It would almost be snuffed out."