Industry fears UK will impose windfall profits tax

Oil companies operating in the UK are expected to be hit by a government tax levied on their 'windfall' profits, stemming from this year's oil price rise. Some analysts say that the amount levied could be as high as 10%, which would raise the UK government some $1.6 billion in revenue.

Oct 31st, 2000


BRUSSELS�Oil companies operating in the UK are expected to be hit by a government tax levied on their "windfall" profits, stemming from this year's oil price rise. Some analysts say that the amount levied could be as high as 10%, which would raise the UK government some $1.6 billion in revenue.

This would be enough to scrap the planned inflation-linked fuel duty increase.

However, the supplementary tax levy could jeopardize government efforts to promote cooperation with the oil majors to prevent any repeat of the fuel blockades that paralyzed the UK in September.

Protesters have vowed to renew the blockades starting Nov. 13 if fuel prices are not reduced.

The government first proposed a review of the North Sea oil tax regime 2 years ago, but this was abandoned when the price of oil plummeted.

The UK Offshore Operators Association has warned the government against the levy, saying that the extra financial burden could jeopardize the sector. UKOOA pointed out: "The North Sea has smaller fields, deeper waters, and higher costs than its rivals in Eastern Europe, West Africa, South America and The Far East."

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