Chevron, the second-largest U.S. oil company, is not happy with the U.K. government's decision to raise taxes on oil and gas producers operating in the North Sea and the California-based company warned there could be consequences stemming from the higher tax rate.
Chevron CEO John Watson said ''there will be unintended consequences of that in terms of where we choose to invest'' in an interview with the Financial Times. Watson noted industry was not consulted when the decision to raise taxes was made and that this is the third time in 10 years the U.K. has raised taxes on oil producers in the North Sea. Watson said he is concerned by the stability and predictability of tax, the FT reported.
Chevron (CVX) operates the Alba, Captain, Erskine and Strathspey fields and are a joint operator of the Britannia Field and has interests in five nonoperated fields: Brodgar, Callanish, Clair, Elgin/Franklin and Jade, according to the company's Web site. Earlier this year, the company said it will sell its Pembroke refinery in Wales.
The U.K.'s decision to raise the tax rate may cause companies such as Statoil (STO), Norway's largest oil producer, to put North Sea projects on hold. The supplemental tax rate on oil and gas production was increased to 32% from 20%, which in turn results in an effective tax rate of 62%, the FT reported.