ExxonMobil sues EU in move to block new windfall tax on oil companies

NEW YORK – United States oil giant ExxonMobil 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 exceeded its legal authority by imposing the levy.

Record profits this year by oil companies benefiting from high energy prices have boosted inflation around the world and led to fresh calls to further tax the sector.

The windfall profit tax is “counterproductive”, discourages investments and undermines investor confidence, ExxonMobil spokesman Casey Norton said on Wednesday.

ExxonMobil will factor in the tax as it considers future multibillion-euro investments in Europe’s energy supply and transition, he said.

“Whether we invest here primarily depends on how attractive and globally competitive Europe will be,” Mr Norton said.

The Financial Times first reported the lawsuit on Wednesday.

Windfall profit taxes imposed by Europe could cost at least US$2 billion (S$2.7 billion) till the end of 2023, ExxonMobil chief financial officer Kathryn Mikells said in a call to analysts on Dec 8.

ExxonMobil said it has invested US$3 billion in the past decade in refinery projects in Europe. The projects are helping it deliver 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 address these issues. Thoughtful policy is critical,” the company said.

Chevron has also warned that taxing oil production will serve only to reduce energy supply by discouraging company investments.

“That goes against the intent of increasing suppliers and making energy more affordable,” Chevron chief financial officer Pierre Breber told Reuters in October. REUTERS