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Shares of London-listed oil firms fall after Labour touts tax

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By Reuters
Shares of London-listed oil firms fall after Labour touts tax
FILE PHOTO: Workers walk past storage tanks at Tullow Oil's Ngamia 8 drilling site in Lokichar, Turkana County, Kenya, February 8, 2018. REUTERS/Baz Ratner   -   Copyright  Baz Ratner(Reuters)

LONDON (Reuters) – Shares in some London-listed oil and gas producers including Tullow Oil <TLW.L>, Premier Oil <PMO.L> and Cairn Energy <CNE.L> fell on Thursday after the main opposition Labour Party pledged to raise taxes on the sector if it wins a Dec. 12 election.

Labour said in its manifesto it would introduce a “windfall” tax on oil companies “so that the companies that knowingly damaged our climate will help cover the costs.”

It added it would safeguard jobs and skills that depend on the offshore oil and gas industry.

Tullow shares were down 1.4%, falling to their lowest since 2016, Premier shares fell 1.9% and Cairn shares 1.3% by 1219 GMT.

Oil prices <LCOc1>, which often influence share prices of oil and gas producers, turned positive on Thursday, erasing earlier losses.

Industry body Oil and Gas UK (OGUK) said it had received no further information other than the manifesto Labour published.

“Any increase in tax rates will drive investors away and damage the long-term competitiveness of the UK’s offshore oil and gas industry, threatening jobs and future tax revenues and needlessly damaging the UK economy,” said Gareth Wynn, OGUK stakeholder and communications director.

“Meeting as much as possible of UK demand from our own sources avoids offshoring emissions to other countries and helps us maintain the industrial expertise we need for engineering a future net zero energy system here in the UK.”

Tullow and Premier declined to comment. Cairn did not immediately respond to a request for comment.

“It is not currently clear who the tax would be applicable to, how it would be calculated, or over what time frame it would be payable,” analysts at Redburn said in a note.

“BP, Shell, Total, Eni, Exxon, Equinor and Repsol all have operations in the UK, so could in theory be targeted alongside the UK (exploration and production companies).”

(Reporting by Shadia Nasralla; Editing by Mark Heinrich)