Exxon sues EU to block new windfall tax on oil companies – Reuters

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Dec 29 (Reuters) – US oil company Exxon Mobil Corp (XOM.N) is suing the European Union in an attempt to force it to scrap the bloc’s new windfall tax on oil groups, arguing that Brussels has overstepped its legal authority by imposing the levy.

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

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 multibillion-dollar investments in Europe’s energy supply and transition, he said.

“Whether we invest here in the first place depends on how attractive and globally competitive Europe will be,” said Norton.

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The European Commission said it has taken note of the lawsuit.

“It is now for the General Court to rule on this case. The Commission claims that the measures in question are in full compliance with EU law,” Commission spokeswoman Arianna Podesta said in a statement on Thursday.

Windfall profits taxes imposed by Europe could cost at least $2 billion through the end of 2023, Chief Financial Officer Kathryn Mikells said in a call to analysts on Dec. 8.

Exxon said it has invested $3 billion in refinery projects in Europe over the past decade. The projects help the company 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 address these issues. Thoughtful policies are critical,” the company said.

Chevron Corp (CVX.N) had also warned that taxing oil production would only serve to reduce energy supplies by discouraging business investment.

“That goes against the goal of getting more suppliers and making energy more affordable,” Chevron’s 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 the excess profits of fossil fuel companies made in 2022 or 2023 and another levy on excess revenues generated by cheap energy producers from skyrocketing electricity costs.

The EU expects the “temporary solidarity contribution” to generate around EUR 25 billion in public revenue, which will be redistributed by EU governments.

“It will ensure that the entire energy sector pays its fair share in these difficult times for many to deal with the extraordinary energy crisis caused by Russia’s weaponization of energy supplies,” the Commission’s Podesta said.

Reporting by Sabrina Valle in Houston, additional reporting by Arunima Kumar in Bengaluru and Jan Strupczewski in Brussels Edited by Chizu Nomiyama, Matthew Lewis, Elaine Hardcastle

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