SHELL could cut its windfall tax bill by as much as £200 million by opening up the Jackdaw gas field in the North Sea, critics have said, as activists target the UK Government’s Scottish hub over the decision.
Jackdaw, near Aberdeen, was given the go ahead by regulators on Wednesday - much to the fury of environmental campaigners who have criticised Westminster’s decision to plough ahead with the development in the midst of a climate crisis.
Climate activists are set to protest outside of the UK Government’s Edinburgh office in the capital, as well as outside of the department of Business, Energy and Industrial Strategy in London, on Thursday.
The field, of which Shell has not disclosed its total cost of investment in, will not come into production until 2025. Despite this, Shell says it will be worth £500 million to the UK supply chain.
The firm said it had taken the investment decision ahead of the Treasury’s announcement and would still continue with the plans despite the levy.
Stop Cambo activists, who successfully campaigned to stop the north sea oil field from being brought into production last year, have pointed out that Shell will be able to take advantage of tax breaks which were announced alongside the levy on fossil fuel firms.
The company will be able to reduce their bill by claiming back investment costs.
This could lead to Shell paying a whopping £200m less in windfall tax over the next few years, according to an analysis of Rystad Energy data by the campaign group Uplift.
Tessa Khan, director of Uplift said that Jackdaw’s approval means that the public “is now losing money to Shell”.
She added: “We are forgoing £200 million for almost no public gain: these reserves are a fraction of UK demand and so do very little for energy security, and will do nothing to reduce soaring energy bills.
“It means that we’ll effectively be paying for this gas twice: once in this huge subsidy to Shell to develop Jackdaw and again when it’s drilled and sold back to us.
“Jackdaw’s gas belongs to Shell and it can charge us what it likes for it. How does the Chancellor think this solves the UK’s energy crisis? The truth is it doesn’t - it makes it worse.”
Khan urged the UK Government to reverse the decision as there cannot be any new oil and gas fields if “we’re to maintain a liveable climate”.
She continued: “Jackdaw’s gas reserves solve nothing, they only make the climate crisis worse. “We need an energy strategy from this government that puts the public’s needs for an affordable, clean energy supply over Shell’s need to profit, which means a rapid acceleration of renewable energy and a massive energy efficiency programme.
“This is the only way we’re going to ensure people can afford to stay warm this winter and next, while not setting fire to our only home.”
Scottish Greens North East Scotland MSP Maggie Chapman said: “Rishi Sunak gave the green light to big oil and gas companies to double down on drilling with his ludicrous rebate scheme, which encourages companies to extract more fossil fuels and penalises them for investing in renewables.
“It’s no surprise that Shell, and no doubt others, will take advantage of this at the expense of the public purse.
“Only with full powers over our energy economy that come with independence can Scotland deliver the kind of just transition that is so urgently needed, create green jobs for the future, and stop the UK Government wrecking the planet.”
The energy profits levy increases the total tax rate in the North Sea from 40 per cent to 65 per cent. This is still below the 70% global average, and in neighbouring Norway, the levy is 78%.
Shell said yesterday that local gas production plays an “essential role” in the transition to net zero but that can only happen with a “stable fiscal policy” from the UK Government.
Kwasi Kwarteng, Cabinet Secretary for BEIS, said yesterday on Twitter: “Let's source more of the gas we need from British waters to protect energy security.”
It comes as activists are set to stage emergency protests in Edinburgh and London after the approval was given for the gas field.
Campaigners are also urging others to start a #StopJackdaw Twitter storm and to specifically target MPs demanding they stop the project going ahead.
