Shell calls for ‘certainty’ on Labour’s oil coverage after Reeves hikes windfall tax to 38%

Shell is calling for ‘certainty’ on Labour’s oil and gas policy after Rachel Reeves launched a tax raid on the sector.

The energy giant said it would lobby the Government for ‘alternative fiscal regimes’ after the Chancellor raised the windfall tax on North Sea oil and gas producers from 35 per cent to 38 per cent.

It came as the FTSE 100 firm yesterday beat expectations to report £4.6billion profit in the third quarter in a boost for chief executive Wael Sawan’s strategy refocusing on fossil fuels.

Its shares leapt 3.5 per cent, or 88p, to 2578.5p after it beat analyst estimates of £4.1billion profit. And Shell said it would give more returns to investors by buying back £2.7billion of its shares.

But it came after the North Sea oil and gas industry was dealt a major blow in the Budget as Reeves announced plans to raise the windfall tax.

She will also extend the tax – which was introduced by the Conservatives in response to soaring energy prices following Russia’s invasion of Ukraine – to 2030. 

And she removed the investment allowance, which lets companies offset tax from capital that is re-invested.

‘Elected officials just have to balance budgets in the best way they see fit. We have to look for policies that provide certainty,’ Shell’s finance chief Sinead Gorman said yesterday.

‘We invest over the long term. We have seen a number of changes in fiscal policy in the last few years, but continue to engage constructively with the Government on alternative fiscal regimes to support the future of the North Sea and energy transition in the UK.’

Despite the forecast-beating profits, total earnings were down 3.1 per cent on last year, amid a ‘less favourable’ macroeconomic environment.

Brent crude prices have remained low over the past six months, and weaker demand for oil worldwide has hit margins at Shell’s refineries.

Maurizio Carulli, an energy analyst at Quilter Cheviot, said: ‘There have been headwinds, with lower oil prices and weaker refining margins, so this is an impressive result.’

Shell weakened several carbon reduction targets this year, following other oil and gas giants in placing higher emphasis on financial returns.

It comes amid pressure from investors for Shell to close the valuation gap with US rivals Chevron and ExxonMobil.

Russ Mould at AJ Bell said: ‘The focus under Sawan has been on streamlining and simplifying the business, taking a more hard-nosed approach to energy transition.’