Shell Sees $600 Million in Charges From Osborne’s North Sea Tax

Royal Dutch Shell Plc (RDSA) said it will take charges of more than $600 million this year and next after U.K. Chancellor of the Exchequer George Osborne raised taxes on North Sea oil profits.

Shell will set aside $150 million for the rest of this year after a $60 million charge in the first quarter, Chief Financial Officer Simon Henry said on a conference call with journalists today. The tax change will cost about $400 million next year.

Osborne last month raised the levy on oil production profit to 62 percent from 50 percent to pay for a tax cut on gasoline for consumers. He also said he’s considering reducing tax relief for dismantling operations, known as decommissioning. That would cost Shell another $500 million in charges, Henry said.

“Tax in the North Sea is primarily a driver of investment decisions,” Henry said. He declined to estimate how much less Shell will invest in the region, saying they’re still considering the matter.

BP Plc (BP/), the second-biggest European oil company after Shell, said yesterday it took at $683 million one-off deferred tax adjustment in the first quarter because of the North Sea tax increase. It will take an additional $400 million charge if tax breaks on decommissioning are cut.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net