Sir Jim Ratcliffe has warned that taxing the North Sea oil and gas industry to death threatens future investment.

The billionaire chief executive of chemical company INEOS criticised the UK Government's decision last year to introduce a huge windfall tax on offshore producers.

Speaking to the Financial Times, Sir Jim said Westminster was playing “primitive politics” when it increased the taxes from 40% to 65% and then 75%.

“Taxes are now so high that profits no longer fund future investments,” he added.

“What the country needs is energy security - which means encouraging developments in our strategic energy reserves in the North Sea. There has been no thought given to the long-term consequences of this ‘tax it to death’ move.”

David Bucknall, chief executive of INEOS’s energy division, said the company would instead welcome a “price floor” on the windfall tax, which would remove the levy when oil and gas prices fall below a certain level.

Earlier warnings

The Telegraph says Sir Jim's comments follow warnings from energy groups that high taxes risk harming investment in Britain.

Just last week the UK’s biggest oil and gas producer, Harbour Energy, said that the review of its British organisation, which will see hundreds of jobs going, is on track to complete in the second half of this year.

As previously announced, this study is expected to result in a reduction of around 350 onshore positions.

The company last month confirmed plans to axe one fifth of its workforce, blaming the controversial windfall tax on North Sea oil and gas producers for deterring investment.

The majority of the jobs going are understood to be in Aberdeen.

Harbour has pointed to the chancellor’s money grab having squeezed cash flows and put off financial backers.

Shifting attention

In January, the firm said it was preparing to shift attention outside Britain in response to the new levy. Then, in March, the company revealed that the new tax had virtually wiped out its profits for the last year. Profits after tax at were less than £7million on turnover of more than £4.5billion.

Harbour said last week there was reduced UK activity in certain areas due to the windfall levy, including partner-cancelled programmes at Elgin Franklin and Beryl and rephasing of certain decommissioning activities.

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