Shell has criticised the North Sea windfall tax, claiming that it will hit investment in oil and gas while failing to provide any incentive to invest in the energy transition.
Ben van Beurden, the energy firm's chief executive, said the UK would be seen as an “unpredictable” place to invest after the imposition of the Energy Profits Levy.
“It’s misnomered as a windfall tax: it’s actually a tax,” he said.
"Would we now invest less in oil and gas [in Britain] because it’s higher tax? I think that’s probably inevitable for the whole industry,” he told the Aurora Spring Forum, an energy conference.
The UK Government said tax on "unexpected, extraordinary profits" of oil and gas producers would rise from 40% to 65% and will remain in place until prices “return to historically more normal levels” or the activation of a sunset clause in 2025.
The government aims to raise £5billion in the first year to help people struggling with energy bills.
However, the levy has drawn a fierce backlash from the industry, despite significant allowances designed to encourage investment.
Mr Van Beurden said that while raising taxes was the government’s prerogative, there were “good and not so good ways” of doing it, The Times reports.
He said Shell would have liked to have seen investment allowances for companies to invest in the energy transition, rather than solely in the North Sea.
EU energy rationing can't be ruled out
Meanwhile, Mr van Beurden said rationing of energy in Europe cannot be ruled out due to worries over the supply of gas from Russia.
He said a "really tough winter in Europe" was ahead, with energy prices set to see "significant" rises.
Energy prices jumped earlier this year after Russia invaded Ukraine. Russia has also been accused of using gas "as a weapon" by limiting supplies in response to EU sanctions.
Last month, Germany moved closer to gas rationing after it triggered the "alarm" stage of an emergency gas plan to deal with shortages, amidst fears of tighter supplies. The highest level of the plan would allow the state to intervene and prioritise energy allocation to households and emergency services.
This week, Russian natural gas supplies to Germany via the Baltic Sea pipeline Nord Stream 1 were halted for 10 days of annual maintenance work, but there are fears that supplies may not restart.
Italy has also reported shortages in gas supply, with Italian energy giant Eni revealing last month it was only getting half of the 63 million cubic metres per day it had requested from Gazprom.