The Treasury is courting bankers to rally support for oil and gas projects
- Treasury Department officials have invited several major banks to a meeting on Friday
- You want to convince them to invest in the North Sea again
The government will next week try to woo banks and other financial institutions to secure support for oil and gas projects in the North Sea, according to The Mail on Sunday.
Treasury officials, in a charm offensive, invited several major banks to a meeting on Friday to persuade them to resume investment in the region, whose profits have been eroded by the government’s random tax.
Invited companies include Barclays, Lloyds and NatWest, as well as investment firms Fidelity and Abrdn. Foreign banks such as the American Wells Fargo, the Dutch ING and the French BNP Paribas and Société Générale were also approached.
Treasury officials have invited several major banks to a meeting on Friday as part of a charm offensive to persuade them to restart investments in the North Sea
However, only a handful of those on the guest list are expected, according to a person familiar with the matter, as many institutions, including Barclays, NatWest and HSBC, are said to have already left the region entirely or have scaled back investments.
A key factor alongside the windfall tax is the growing pressure on banks to comply with environmental, social and governance (ESG) criteria designed to encourage companies to refrain from investing in contentious industries like fossil fuels and defense.
BP chief Bernard Looney has said he plans to invest £18bn in the UK over the decade, while Shell has pledged to invest £25bn in the sector.
But those investments could now be at risk as the shrinking pool of funds and rising tax burdens have slowed several North Sea projects.
These include the Perth area, a concession believed to be worth the equivalent of 55 million barrels of oil, which was abandoned by its operator Parkmead in June, citing the group as having “significant concerns” about UK tax policy and “a lack of public and political support”. led’.
Promise: BP’s Bernard Looney plans to invest £18bn in the UK over the next decade
It could also jeopardize projects like Rosebank and Cambo, Britain’s largest undeveloped oil fields.
An industry source told The Mail on Sunday: “At a time when the UK needs secure supplies of gas from the British North Sea, it is a damning judgment on the government’s energy and financial policies that the banks owned by the country benefit, not reinvest.” into it.
“If UK banks continue to refuse to fund them, the country’s energy security and net-zero targets are at risk, condemning customers and businesses to higher costs, higher carbon emissions and less secure imports.” This week the government must reassure the banks that investments in the country’s energy market will not be equally jeopardized.”
Financial firms have become increasingly reluctant to invest in UK fossil fuel projects in the North Sea after Chancellor Rishi Sunak imposed a 25 percent levy on profits from the sector. The tax was then raised to 35 percent by his successor, Jeremy Hunt.
The decision came amid mounting public anger over booming oil and gas company profits after the invasion of Ukraine sparked a spike in global energy prices.
But the levy has proved unpopular in the industry, with many companies arguing it has hurt UK investment and made the country more dependent on imported energy.
Linda Cook, chief executive of Harbor Energy, the largest oil producer in the North Sea, said the company’s profits were “all but wiped out” by the tax last year, forcing the company to shed hundreds of jobs. And London-listed EnQuest has halted drilling at its Kraken oilfield as a result of the levy.
The government has since tried to withdraw companies, and Sunak pledged last month to issue hundreds of drilling licenses starting in the fall.