Chevron warns over North Sea levy

Oil giant Chevron has warned there may be “unintended consequences” from the Government’s £2bn raid on profits of North Sea oil and gas companies.

John Watson, chairman and chief executive of Chevron – America’s second-largest oil company – said the move to raise the levy on the firms in order to fund a cut in fuel duty was “disappointing”.

Signalling that it could impact the firm’s North Sea plans, he said: “When you increase taxes every few years, particularly without consulting with industry, there will be unintended consequences of that in terms of where we choose to invest.”

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He added: “Chevron produces oil and gas in 26 different countries... We choose venues that have the right geologic and fiscal terms.”

George Osborne’s Budget decision to increase the supplementary oil and gas levy by 12 per cent has drawn a furious response from the industry, which complained there had been no consultation.

MPs on the Commons Treasury Committee recently cautioned it could undermine the Government’s credibility, coming less than a year after Mr Osborne promised the oil and gas industry a stable tax regime.

Mr Watson said he would meet with government representatives to air concerns over the impact on its North Sea projects.

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Chevron is considering a £5bn investment at its Rosebank discovery off the Shetland Islands.

He said it was not just the level of tax – increased from 20 per cent to 32 per cent – but also the unpredictability of Britain’s tax regime, which added to the risk of drilling exploration wells.