The boss of a leading North Sea oil and gas producer has called on the Chancellor to limit the potential length of the windfall tax on the sector.
Linda Cook, chief executive of Harbour Energy, has warned the controversial levy will result in less capital being available for companies to invest in the basin - and create a more fiscally unstable environment.
The cash raid is being imposed to partly fund support to help Britons with the rising cost of living
The Government has said the new tax will remain in place until oil and gas prices return to historically more normal levels or the activation of a "sunset clause" in 2025.
This has led to fears that, unless the prices of hydocarbons fall sharply, it could turn into a multi-year levy which could cost the offshore industry up to £17.5billion.
However, there is one "sweetener" which comes with the new tax - North Sea producers will get a 91p tax saving for every £1 they invest in the basin.
Harbour Energy is the largest UK listed independent oil and gas company.
CEO Ms Cook said yesterday she has written to Chancellor Rishi Sunak setting out, in detail, Harbour Energy's concerns over the energy profits levy (EPL).
She said: "In particular, I have argued that the EPL, as currently proposed, disproportionately impacts the independent oil and gas companies which have recently invested the most to help ensure UK domestic-energy supply.
"It will result in less capital being available for companies to invest in the North Sea, for both oil and gas and energy-transition projects, as well as creating a more fiscally-unstable environment for those investments.
"My letter also put forward several suggested revisions to the Treasury, which I urged them to adopt to protect investment and mitigate the long-term damage of the EPL - including allowing the offset of tax losses from past investment; no exclusion of decommissioning spend for EPL purposes; and a change to the sunset clause to the end of 2023, in line with when oil and gas prices are forecast to return to more normal levels.
While we appreciate the scale of the cost-of-living crisis in the UK, it is important that Harbour Energy makes the Government aware that a substantially-higher tax burden over the next few years will only result in less capital being available for companies to invest in the North Sea.
"The oil and gas that Harbour Energy produces today is the result of billions of dollars of investments made by our company over the past five years and those investments have been made on the assumption of a stable fiscal regime.
"We will continue to seek to constructively engage with the Government and the regulator on the details of the implementation of the proposed tax, with the aim to reduce impacts where we can/”
It has also emerged that British Gas owner Centrica will not launch a legal bid to challenge the levy.
But chairman Scott Wheway warned of "long-term problems" if the tax is expanded to include power generators.
He said the Treasury could cause problems in the move to decarbonise the UK if it insists on also taxing the profits of energy generators more.
Meanwhile Business Secretary Kwasi Kwarteng has paid a visit to the Shell HQ in London, and he had a message for the oil and gas sector.
He said: "We need to see industry stepping forward with clear plans for accelerating investment in both domestic production and in the clean energy technologies of tomorrow - and I welcome Shell's plans to invest up to £25billion in next generation North Sea energy technologies in the next 10 years.
""We all need to demonstrate that production on the UK Continental Shelf will have a lasting benefit to the British economy - helping to secure jobs and livelihoods for the decades ahead."