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Woodside boss warns profits levy is a ‘red flag’

© Supplied by WoodsideWoodside chief executive Meg O'Neill
Woodside chief executive Meg O'Neill

The head of the newly merged Woodside Energy Group said the UK government’s windfall tax is a “red flag” that suggests potential investments in the North Sea carry more risk.

Chief executive Meg O’Neill told the Times newspaper that: “If the government has aspirations of reviving the UK oil and gas sector, this is probably not the best way to do it.”

The Chancellor announced a suite of “temporary measures” as part of its Energy Profits Levy on 26 May, including an increase to the current headline rate of tax on oil and gas producers from 40% to 65%, and a near-doubling of investment allowances.

Ms O’Neill spoke to the newspaper ahead of Woodside’s secondary listing in London on Monday, and following the completion of its A$40 billion (US$29bn) merger with BHP Petroleum last week.

The group will trade under the ticker “WDS”, in line with its new code on the Australian Stock Exchange, and alongside another secondary listing in New York.

The additional listings were reportedly carried out to smooth the process of granting shares to existing investors in BHP, with London-based shareholders expected to own about 10% of the company at first.

The merged group is now a top 10 global independent energy company by production and the largest energy company listed on the ASX. Group-wide production amounts to over 500,000 barrels of oil equivalent per day (boepd), of which nearly three-quarters is gas.

The company has no UK assets and no plans to invest in the North Sea, though Ms O’Neill noted that the recently enacted levy would provide further disincentive.

“It sends us a message that this is just a riskier jurisdiction to do business in than we might have previously thought,” she told the Times.

“One of the things that’s most important for us from a government perspective is a stable tax regime,” Ms O’Neill added. “When governments change the rules without a whole lot of consultation or engagement, that’s a bit of a red flag for us.”

“I take away a signal that the UK is not going to be a stable place to invest. If we’re going to make an investment that needs to pay out over 20 years’ time and we have a government that will change tax laws abruptly, that sends a signal that it’s not a particularly conducive place to invest.”

Her comments echo that of fellow energy giants such as Shell, which warned that the decision would increase uncertainty in its UK investments plans.

Deirdre Michie, chief executive of trade body Offshore Energies UK, also warned the move would “challenge investors and potentially reduce future UK energy production.”

Meanwhile, AGCC policy director Ryan Crighton last week said based on the current rate of tax over the next three-and-a-half years, the levy could see a total of £17.5bn taken from oil and gas firms.

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