Dec 29 (Reuters) – U.S. oil giant Exxon Mobil Corp (XOM.N) is suing the European Union in a bid to force it to scrap the bloc’s new windfall tax on oil groups, arguing that Brussels has overstepped its legal authority in imposing the levy.
Record profits made this year by oil companies taking advantage of high energy prices have boosted inflation around the world and led to renewed calls to tax the sector more.
The windfall tax is “counterproductive”, discourages investment and undermines investor confidence, Exxon spokesman Casey Norton said Wednesday. Exxon will consider the tax as it considers future multi-billion euro investments in Europe’s energy supply and transition, he said.
“Whether we invest here depends primarily on Europe’s attractiveness and global competitiveness,” Norton said.
The European Commission said it took note of the lawsuit.
“It will now be up to the General Court to rule on this case. The Commission maintains that the measures in question are fully in line with EU law,” Commission spokeswoman Arianna Podesta said in a statement on Thursday.
Windfall taxes imposed by Europe could cost at least $2 billion through the end of 2023, Chief Financial Officer Kathryn Mikells said on a Dec. 8 call with analysts.
Exxon said it has invested $3 billion over the past decade in refinery projects in Europe. The projects help it supply more energy products at a time when Europe is struggling to reduce its imports from Russia, the company said.
“We will continue to work with EU leaders to resolve these issues. Thoughtful policy is essential,” the company said.
Chevron Corp (CVX.N) had also warned that taxing oil production would only serve to reduce energy supply by discouraging business investment.
“This runs counter to the intention of increasing the number of suppliers and making energy more affordable,” Chevron chief financial officer Pierre Breber told Reuters in October.
In September, EU countries approved emergency levies on windfall profits from energy companies, including a levy on excess profits of fossil fuel companies made in 2022 or 2023 and another levy on excess income that low-cost power generators are taking advantage of soaring electricity costs.
The EU expects the “temporary solidarity contribution” could generate around €25 billion in public revenue which would be redistributed by EU governments.
“This will ensure that the entire energy sector pays its fair share in these difficult times for many to deal with the extraordinary energy crisis resulting from Russia’s militarization of energy supply,” Podesta said. of the Commission.
Reporting by Sabrina Valle in Houston, Additional reporting by Arunima Kumar in Bengaluru and Jan Strupczewski in Brussels Editing by Chizu Nomiyama, Matthew Lewis, Elaine Hardcastle
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