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The boss of one of Britain’s largest independent oil and gas producers has said the company is “very actively” looking for opportunities abroad, as he likened navigating the country’s tax regime to working in a “war zone”.
The comments by David Latin, chairman and interim chief executive of London-listed Serica, come just days before a general election in which Labour’s pledge to increase windfall taxes for producers is set to dominate the campaign in Scotland.
“Other than when I was responsible for a company with significant assets in a war zone, I have never encountered a situation where making investment decisions was so challenging,” Latin said Thursday at the company’s annual general meeting.
He noted that neither Labour nor the Conservatives had committed in their manifestos to cutting windfall taxes to recognise a fall in prices. He added that Labour’s plan to increase them and reduce tax relief for capital investment would make most North Sea projects unprofitable.
Latin was previously a director at energy company OMV, where he was involved in the disruption of the company’s operations in Libya following the fall of late leader Muammer Gaddafi.
Serica’s boss said the company, whose UK operations are in the North Sea, would not abandon the UK but that an increasingly difficult trading environment would force it to look elsewhere for growth.
“While we remain vigilant for opportunities in the UK that may be attractive despite this increasingly challenging context, we are also looking very actively abroad,” he said.
Serica has contributed around £500 million in UK taxes since 2020 and is responsible for around 5 percent of the country’s gas production.
Smaller companies that increasingly dominate the aging North Sea Basin after big companies withdrew say they are subject to punitive taxes that have severely eroded profits and made investments uneconomic.
In addition, Labour’s biggest union funder Unite joined Scottish businesses on Thursday in demanding that the party drop its opposition to new oil and gas exploration in the North Sea until it can come up with a plan to replace jobs that would be lost.
Labor has a lead of more than 20 points in the polls ahead of the July 4 election. The party’s plans to increase the windfall tax on oil producers from 75 percent to 78 percent have led to warnings from companies and unions that as many as 100,000 jobs, mainly in Scotland, are at risk.
Labour has also pledged to abolish “unjustifiably generous investment subsidies” that companies can use to reduce their tax bill, and to stop licensing new fields in the North Sea, which it says would worsen the climate crisis without ensuring energy security.
The conservative government, which introduced the windfall tax after the outbreak of the conflict between Russia and Ukraine in 2022, has pledged to keep the levy in place until 2028-2029 unless prices “return to normal” sooner. It also plans to legislate to mandate annual licensing rounds for oil and gas production.
The Scottish National Party, which is losing support to Labour, has said decisions on oil and gas exploration, which are the preserve of Westminster, should be taken on a case-by-case basis and subject to a “robust climate compatibility assessment”.
A group of more than 60 climate activists and lobby groups, including Greenpeace and Oxfam, on Thursday called on the next British government to commit to phasing out oil and gas production while ensuring a “clear and funded” transition for workers.
Labour has previously defended its windfall tax policy, with a party official telling the Financial Times this month that it was common for companies to threaten to pull out if faced with higher taxes.