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London faces backlash over oil tax

April 1, 2011 at 7:31 AM   |   Comments

LONDON, April 1 (UPI) -- A new tax proposed for the British oil and natural gas sector is pushing investors out of the region, an industry representative complained.

Norwegian energy company Statoil said this week that $3.2 billion in new proposed taxes would cause the company to "pause and reflect" regarding work in the North Sea.

British energy company Centrica said the tax would harm investments.

Malcolm Webb, head of the industrial group Oil & Gas U.K., raised similar concerns during a meeting with British Energy Secretary Chris Huhne. Webb said the issues had damaged investor confidence.

"The U.K. oil and gas industry believes that the tax change announced in last week's budget is ill-informed and was constructed hurriedly and without proper thought of the potential impacts on investment, production and hence energy supply and employment," he was quoted by The Telegraph newspaper in London as saying.

Chancellor of the Exchequer George Osborne defended the move saying higher oil prices meant the region was still "very profitable."

Meanwhile, British data on the energy sector indicated oil and gas production fell more than 7 percent in 2010 when compared with 2009 levels.

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