Britain's Business and Energy Secretary Kwasi Kwarteng has written to the North Sea oil and gas industry asking it to set out a clear plan to reinvest its profits into British energy projects, his department said on Saturday.
Energy prices have hit record highs this year and enormous profits for energy companies have led to repeated calls from the opposition Labour Party for a windfall tax on producers of North Sea oil and gas to fund help for people struggling with power bills.
"In return for the UK Government’s continuing support for the sector, the prime minister, the chancellor and I want to see a very clear plan from the oil and gas industry to reinvest profits in the North Sea and, importantly, in the clean energy technologies of the future," Mr Kwarteng wrote in his letter to the industry.
"At our next meeting in coming weeks, I would like you to set out how you will reinvest profits, double down on investments in the clean energy transition and importantly accelerate and maximise domestic oil and gas production."
Earlier this month the government set out plans to scale up domestic sources of affordable, clean and secure energy, including a new licensing round for North Sea oil and gas.
Power and gas prices for millions of households rose by 54 per cent from April, after the regulator, the Office of Gas and Electricity Markets, increased its cap on the most widely used tariffs, when wholesale global gas prices hit record highs.
Since the new cap was set, global gas prices have risen further, following Russia’s invasion of Ukraine.
"We need to collectively show the British people how the success of our offshore oil and gas sector has a direct and enduring benefit to the British economy and people’s jobs and livelihoods in order to protect the North Sea as a major UK energy asset for decades to come," Mr Kwarteng wrote.
Speaking to Sky News on Sunday, Mr Kwarteng criticised the idea of a windfall tax on energy companies.
“I’ve never been a supporter of windfall taxes, I’ve been very clear about that publicly. I think they discourage investment,” he said.
Chancellor Rishi Sunak last week hinted at a possible windfall tax on oil and gas companies, despite previously dismissing the policy.
His shift in stance comes as the government comes under mounting pressure to ease the cost of living crisis for millions of people in Britain.
Mr Sunak told Mumsnet he had previously shied away from the idea because he did not want to deter investors in new oil and gas extraction, and pointed to a recent £25bn investment by one company in the North Sea.
But signalling a possible change in stance on windfall tax, Mr Sunak said: “What I would say is that if we don’t see that type of investment coming forward and companies are not going to make those investments in our country and energy security, then of course that’s something I would look at and nothing is ever off the table in these things.”
