Higher taxation of energy companies is justified if it gives governments the means to ease costs for consumers and other businesses, Equinor’s chief executive has said, in a rare message of support from a corporate leader for higher levies.
The Norwegian state-controlled group, the largest supplier of piped gas to Europe after Russia, has been among the biggest beneficiaries of Moscow’s decision to choke supply to the continent, which has sent prices soaring to record levels. Pre-tax earnings hit $17.6bn in the second quarter, triple the level of a year earlier.
“We are fully aware that there are other people on the other side of the gas bill,” Anders Opedal told the Financial Times. “Of course we would like a very stable framework around our business but we do see the need for government to intervene.”
European gas prices hit a record €343 per megawatt hour in August and are now trading at about €240 per megawatt hour, more than 20 times higher than two years ago. The rally has supercharged profits for European gas producers, leading to calls on companies such as Equinor, BP and Shell to help ease the cost for customers.
But Opedal argued that governments were better placed than oil and gas companies to take the action needed to support businesses and households through the energy crisis.
“It is much better that government distributes wealth than commercial companies start to do something on their own, which would not be evenly distributed and might not hit the right group of people,” he said.
Opedal’s message of support for higher taxes comes as Brussels weighs measures to tackle the widening energy crisis, including possible bloc-wide levies on fossil fuel producers and electricity generators. The UK imposed its own “energy profits levy” on oil and gas producers in the North Sea in May.
Equinor, two-thirds owned by the Norwegian state, already pays a marginal tax rate of 78 per cent in its home country, where it generates the majority of its earnings and which is not a member of the EU. As such, it is possible that Equinor’s tax rate will not rise.
Opedal said he viewed Equinor’s principal responsibility to be increasing the flow of gas into Europe to help ease the supply crunch.
Between April and June the company increased gas production by 18 per cent compared with the same period a year earlier and has said it will continue efforts to maximise production.
In addition to increasing piped supply into Europe, Equinor in June resumed exports of liquefied natural gas from Hammerfest after a 2020 fire at the site, which at full production can meet the annual gas demand of 6.5mn European homes.
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