A North Sea oil boss yesterday called on Chancellor Jeremy Hunt to be "calculated and thoughtful" ahead of next week's Budget, when he is expected to announce a new windfall tax raid on offshore producers.
Gilad Myerson, chairman of Ithaca Energy, was speaking to Energy Voice on the day the company floated on the London Stock Exchange.
Ithaca is said to be "very much focused on sanctioning" both its operated Cambo field, and the Equinor-operated Rosebank field.
The west of Shetland projects represent some of the largest untapped oil and gas resources in UK waters.
Next Thursday's Budget is likely to be toughest seen in many years when the chancellor is expected to unveil £35billion of spending cuts and £25billion of tax rises in a bid to balance the nation's finances.
And there is mounting concern in the North Sea oil sector that it will be targeted for a sizeable chunk of the extra tax being raked in.
Second round
The chancellor is believed to be preparing to unleash a second round of the controversial energy-profits levy (EPL) on oil producers.
It is understood that the additional tax on offshore operators could be raised from 25% to 30% and extended by three years to 2028. Officials have also been working on plans to widen the levy to include electricity generators.
Mr Myerson said that, should the windfall tax be adjusted so not to support fresh developments, then the new fields will be "something that, financially, we just won't be able to embark on".
It is not known yet whether a 91% investment incentive linked to the levy will be impacted by the chancellor’s announcement.
Uncertainty around the windfall tax is one of the major barriers to investment, Mr Myerson said.
"I think the one question mark at the moment is the EPL. It's the biggest question mark we have.
Legislation soon
"The government will be coming out with legislation very soon, with adaptation to the EPL.
"I would say the EPL, in its current form, is supportive of development and we assume that it will continue to be supported for development.
"But if the government decides not to support new developments, then obviously that is something that, financially, we just won't be able to embark on.
"And it's not only us - our banks won't provide us with the financing if economical returns are not attractive."
- UK offshore wind farm investment will be at risk if any windfall tax imposed on renewable energy generators is too severe, according to the head of one of the world's top developers of the projects.
Orsted chief executive Mads Nipper said some measures to contain prices were acceptable - like the European Union's cap on revenues – but setting any cap too low would threaten investment.
It would be a better idea to put renewable projects on long-term contracts to sell power at fixed prices, he added.
The CEO said the energy crisis may delay the transition away from fossil fuels in the short term as governments prioritise shoring up supplies of gas and containing prices. But, in the long term, he feels renewables will win out.