INEOS Energy ends UK and North Sea investment

INEOS Energy has announced that it is ending its investment in Great Britain and the UK North Sea, due to what the company describes as an adverse fiscal and taxation regime.

The decision follows on the heels of CEO Sir Jim Ratcliffe’s recent statement that Great Britain has become “one of the most unstable fiscal regimes in the world.”

INEOS officials have often cited the fact that the total effective tax rate on energy profits in the UK (including the Energy Profits Levy, or EPL) is around 78%, which is significantly higher than in other competitive markets like the US, where the effective tax rate is approximately 40%. 

The Energy Profits Levy – essentially a windfall tax on oil and gas company profits – was introduced in May 2022 by the UK government to raise revenue from the “exceptional profits” of North Sea oil and gas companies during a period of high energy prices. It is an additional 25% tax on top of the existing 40% headline rate of tax for the sector. 

The EPL was intended to be a temporary measure, with the government stating it is expected to be phased out when oil and gas prices return to more normal levels, but the exact end date remains undetermined.  

As reported in The Times, Ratcliffe said that INEOS would henceforth focus on its business in the United States after closing down its Grangemouth oil refinery in Scotland.

Brian Gilvary, chairman of INEOS Energy, told The Telegraph that the company would divert £3 billion of investment to the United States.

Gilvary was quoted to say: “We have stopped investing in Britain. Our future investment will not be [in] the UK. There’s no question of that.

“The problem is that the UK has become one of the most unstable fiscal regimes in the world from a perspective of natural resources and energy. It means we cannot invest with any certainty because we can’t be sure what future tax rates will be.”

Gilvary said INEOS would prefer to invest in the US as a market that “absolutely understands the importance of domestic supplies and how you can drive economic growth off the back of it.”

As reported by The Times, the INEOS chemicals group has closed the Grangemouth refinery, leading to the loss of 430 jobs. It was run as a joint venture with PetroChina. Ratcliffe has complained in the past that high carbon taxes create additional costs that achieve “nothing for the environment” because they “merely shift production and emissions elsewhere.”

Gilvary added: “For us the future lies in other countries, mostly the United States. The United States has got a long track record. In the 1990s, it was producing 6.5 million barrels of oil a day and importing five million, but now it’s producing oil and gas equivalent to 13 million barrels a day and exporting. That’s proper energy security and a proper fiscal regime.”

INEOS has been investing in the US with the purchase of oil and gas operations in the Gulf of Mexico from the China National Offshore Oil Corporation for an undisclosed sum. The group also acquired an oxide business in the US from LyondellBasell Industries, an American chemicals group, for $700 million in 2024.

David Whitehouse, CEO of Offshore Energies UK, said that Ratcliffe’s comments should prompt an immediate review of the energy profits levy, or windfall tax on oil and gas company profits.   

Whitehouse said: “There is no time to lose – jobs are being lost today. The offer from industry is clear – reform this tax now to protect UK jobs, investment and the economy. The North Sea has been the powerhouse of the UK’s industrial success and prosperity and with the right fiscal and economic policies it can be the platform for an era of economic success.”