ConocoPhillips hits back against call for windfall oil tax: Gastech
ConocoPhillips CEO Ryan Lance has criticised calls for a windfall tax to be imposed on the record profits that oil and gas companies are making due to soaring prices, pointing to the cyclical nature of the industry.
“You have to look at what the business has gone through over the last decade. During that time we have been through three upcycles including the current one, and two downcycles,” he said in a panel discussion at the GasTech conference in Milan on September 5. The upstream side of the business hasn’t delivered much more than a single digit rate of return.”
UN secretary-general Antonio Guterres called on governments to impose taxes on excess oil and gas profits, describing it as “immoral” that companies in the sector were booking record profits from the energy crisis “on the backs of the poorest people and communities.”
The UK introduced a windfall tax on oil and gas profits earlier this year, in a move that the North Sea industry has warned will undermine future investment and undermine UK energy security in the long term. In the US, the Biden administration has also proposed such a step, as has the European Commission, at a time when the EU is grappling with an unprecedented spike in gas and power costs, and the looming risk of a cut-off in Russian gas supply ahead of winter.
Launce described ConocoPhillips as a “price taker" not a price maker in the market, noting after incurring losses in 2020 at the height of the coronavirus pandemic, the company had begun reinvesting in production growth towards the end of last year. The US industry as a whole is reinjecting its profit in expanding output, he said, adding that the country’s crude output was set to grow by 800,000 barrels/day this year and by a similar amount next year.
Lance said the Biden administration needed to embrace an “all-of-the-above” approach to securing global energy security.
“It’s going to take all forms of energy to satisfy the energy security issues that are going on around the world as a result of the invasion of Ukraine. Gas, renewables, probably some coal with nuclear … but we need to do that responsibly.”
He stressed that good policy decisions were needed to promote development of various types of energy, stressing that “more needed to be done.” He also lamented that there was not “a constructive or substantive dialogue” between the industry and the White House on achieving this.
Lance also pointed to mixed messages that the oil and gas industry was receiving from the government. On the one hand, the government has stressed the need for extra oil and gas supply in the next couple of years. On the other hand, the government has said that supply will no longer be needed within five years as the energy transition progresses, he said.