The Fallout: TotalEnergies to Slash UK North Sea Investment on Windfall Tax

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French energy giant TotalEnergies SE will cut investment in the UK North Sea by 25% next year in response to the expanded windfall tax announced by the British government.

The UK last month raised its Energy Profits Levy to 35% from 25% and extended it to 2028 in a bid to shore up public finances. The oil and gas industry has warned that the move threatens development, with Shell Plc saying it will reassess plans for as much as £25 billion ($30.6 billion) of investments.

Total said it’s “evaluating the impact” of the tax change on current and planned projects and will cancel around £100 million of earmarked spending, according to a statement. The firm will no longer add a well at its Elgin field next year as part of that pullback, which was first reported by Energy Voice.

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“The government should remain open to reviewing the Energy Profits Levy if prices reduce before 2028,” Total said. “Without a price floor to the EPL, the current regime will affect short-cycle investment.”

Producers of renewable, nuclear and biomass energy in the UK were also hit with a new 45% windfall tax in plans laid out by Chancellor of the Exchequer Jeremy Hunt.

Power developers had warned that investment would be at risk if any windfall tax was too severe, yet Iberdrola SA, one of the world’s biggest renewable-energy companies, told the UK government this week it will actually boost spending.