Economic news

UK Energy Stocks Rally after Emergency Plan Excludes Windfall Tax

LONDON, Sept 8 (Reuters) - Britain's energy and oil sector received a brief boost on Thursday after a UK plan to tackle the energy crisis excluded a windfall tax on record oil and gas profits.

Shares in FTSE-listed oil majors BP and Shell briefly spiked to session highs as UK Prime Minister Liz Truss set out her plan to cushion consumers and businesses from soaring energy bills. 

Shares in BP and Shell were last up 1.2% and 0.9% respectively, outperforming the UK blue-chip FTSE 100 index which was last up 0.1%.

Truss said the Treasury would announce a joint scheme working with the Bank of England to address the extraordinary liquidity requirements faced by energy firms, worth 40 billion pounds.

Along with the support for bills, Truss announced more than 100 new exploration licences for oil and gas in the North Sea and the removal of a ban on fracking for communities which are willing to go ahead with it.

The FTSE 100 index was little changed by the announcements, while the mid-cap FTSE 250 index fell to a session low.

"The windfall tax thing is why we've got the FTSE 100 up, whereas you've got the mid-cap down," said Danni Hewson, financial analyst at AJ Bell.

"It does impact markets for the likes of BP, Shell, and Centrica and this obviously is going to be a relief to them because up until now it was not absolutely, unequivocally said by Liz Truss that there would be no windfall tax," said Hewson.

Former Prime Minister Boris Johnson had announced a "temporary and targeted" windfall tax on energy producers in May, and the opposition Labour Party had said the levy should be extended.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said Truss' determination not to impose a further windfall tax on the oil and gas sector and her wish for the UK to become a net energy exporter added to the strength of the energy sector.

Reporting by Lucy Raitano; editing by Dhara Ranasinghe and Carmel Crimmins

Source: Reuters

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