Oil and gas companies operating off the east coast are warning they will leave the UK because of hiked windfall tax on their profits.

The government has already announced it is increasing the windfall tax on the profits that oil and gas firms make, ahead of the Budget announcement.

Now, some of the UK’s largest oil and gas companies are reportedly looking to sell their North Sea assets.

Viaro Energy, which has agreed a deal to acquire part of Bacton Gas Terminal and 11 of Shell’s North Sea gas fields, is one of the firms that has criticised the government’s decision to raise the windfall tax.

(Image: BP Picture Library) READ MORE: Bacton Gas Terminal to change hands as energy giant puts North Sea assets up for sale

Francesco Mazzagatti, Viaro Energy’s CEO, said it has already caused “instability” in the oil and gas sector. He speculated this: “Might be the current government’s plan anyway.”

“It will inevitably lead to earlier cessation of production dates and a reduction in investments, which will in turn lead to missing income from oil and gas taxes amounting to hundreds of millions of pounds in upcoming years,” he told Energy Voice.

Francesco Mazzagatti, Viaro Energy’s CEOFrancesco Mazzagatti, Viaro Energy’s CEO (Image: Viaro Energy) The energy profits levy will increase to 38pc from 35pc on November 1 and will remain in place until the end of March 2030.

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Kevin Keable, chairman of the East of England Energy Group (EEEGR), has warned Labour’s decision could have a damaging impact on the region’s supply chain businesses.

He said up to 74pc of UK homes are still heated by gas and as much as half of the electricity we produce also comes from gas. 

Mr Keeble said: “Increasing the windfall tax is likely to impact gas operators’ profit margins, discouraging future investment in extraction and exploration projects.

"Many firms have already scaled back plans due to the current windfall tax.

Kevin Keable, chair of the East of England Energy Group (EEEGR)Kevin Keable, chair of the East of England Energy Group (EEEGR) (Image: Newsquest) "A diminished profit landscape in the oil and gas sector may result in cost-cutting measures, often translating into reduced contracts for supply chain companies, particularly those based locally.

"These businesses may experience a slowdown in demand.

"Given that many firms in the East of England provide specialised support to the offshore sector, there could be direct repercussions on regional employment, skill retention, and, ultimately, the area’s economic growth."