Ineos is pulling back from the U.K. and opting for Donald Trump’s America for new projects, with the Sir Jim Ratcliffe-founded group blaming a “negative” attitude and high taxes in the U.K. for decoupling from its home.
Ineos announced on Saturday that it would acquire oil and gas assets in the U.S. Gulf of Mexico, which would increase the company’s oil production to 90 barrels equivalent a day.
The petrochemicals company so far has invested $3 billion in capital infrastructure in the U.S. in a bid to boost its growth.
In an op-ed for The Telegraph, Ineos Chairman Brian Gilvary, a former BP executive, said: “None of these earlier deals would have been economically attractive in the UK.
“Its current tax regime, its over-regulation and the negative political attitude towards oil and gas are barriers that would deter any investor now,” wrote Gilvary.
Upstream oil and gas profits are subject to a 78% effective tax in the U.K. after Chancellor Rachel Reeves increased the base levy in her October budget.
By comparison, the U.S. charges oil and gas companies a 21% tax, which is in line with corporation tax on other industries. With other levies, the effective tax rate on fossil fuels in the U.S. is 40%.
The U.K. has also suspended the granting of new offshore oil and gas licenses under the Labour government, which Gilvary compared “to tying your legs together at the start of a race.”
Ratcliffe’s Ineos seeks to woo Trump
Energy companies have increasingly walked back their early promises to go carbon neutral, generating huge profits during the COVID-19 pandemic and upping fossil fuel production targets.
Ineos has argued that Asian economies are setting a template by focusing on cheap energy, regardless of its source, which is creating jobs and fueling growth. The chairman namechecked China, which continues to operate several coal-fired plants.
In his op-ed, Gilvary said: “The European approach is to focus on net zero, however, there is a limit to the pace at which this can be achieved, without it becoming uneconomic or inflationary. And we have hit that limit.”
Ineos’s Ratcliffe, who according to TheSunday Times Rich List is worth an estimated £23.5 billion, went on his own rampage against Europe’s clean energy drive in June.
First, speaking with Bloomberg, Ratcliffe, who advocated for Brexit, blasted high energy and carbon costs on the continent as hitting its global competitiveness.
“Europe’s a mess for petrochemicals today,” Ratcliffe said. “Everybody’s leaving petrochemicals in Europe, which I’ve never seen in my working life before.”
Speaking at TheTimes CEO Summit soon after, Ratcliffe called the U.K.’s plan to decarbonize its electricity supply by 2030 “absurd.”
“The North Sea will die off,” Ratcliffe said. “It will become extinct and relatively soon because it is being taxed out of existence.”
Producers are also clearly cognisant of the re-election of Donald Trump in November, spying an opportunity to profit under a President who has been much more partial to fossil fuels and openly trashed clean energy sources, particularly wind.
Throughout his campaign, Trump promised to “drill, baby, drill” upon his return to office, shunning greener pledges rolled out under the Joe Biden administration.
Orsted, another European energy company, has been less welcoming than Ineos to the U.S.’s climate policy and Trump’s re-election, thanks to its focus on wind energy. The group took a $4 billion write-down last year as it canceled offshore wind projects in the U.S. and has lived in the shadow of Trump, who repeatedly espoused erroneous claims that offshore wind farms were killing whales.
Wind energy accounted for around a third of the U.K.’s electricity generation so far in 2024.
