In a bid to force European Union to scrap its new windfall tax on oil groups and energy companies, US oil giant ExxonMobil is suing the bloc, arguing that, by imposing the levy, Brussels exceeded its legal authority.
European subsidiaries of ExxonMobil in Germany and the Netherlands noted in their lawsuit they filed on Wednesday in the General Court of the European Union in Luxembourg that the move is counterproductive amid Europe’s energy supply challenges and will cost Exxon Mobil billions of dollars.
The Luxembourg court must now decide whether to take up the case.
Announcing its lawsuit Wednesday Exxon spokesperson Erin McGrath blasted the tax, pointing out that their suit only targets the counter-productive windfall profits tax and not any other elements of the package to reduce energy prices.
Adding that ExxonMobil’s potential future investment in Europe will depend on how attractive and globally competitive Europe will be for the company, McGrath underscored that this tax would undermine investor confidence, discourage investment, and increase reliance on imported energy and fuel products.
Calling the measure a “solidarity levy” and arguing that it is meant to address high energy prices, the European Union adopted in September a 33% percent tax on oil, gas, and coal profits that are at least 20% higher than average profits in recent years.
The European Commission already commented that the measures in question are fully compliant with EU law and that they will ensure that the whole energy sector pays its fair share in these difficult times, as its spokesperson Arianna Podesta noted.
While consumers have faced energy prices that have more than doubled since Russia’s invasion of Ukraine in February led to a disruption to fossil fuel deliveries to Europe and an energy supply crunch – which was felt in Europe in particular – major oil and gas companies have raked in multibillion-dollar profits amid the high fuel prices.
Although such efforts are unlikely to pass in a divided Congress, these earnings prompted some on the American left to call for a windfall tax as well and President Biden also threatened to tax the oil companies’ profits if they don’t increase production.
Despite reported global profits of $20 billion for this year, ExxonMobil, on the other hand, complained earlier this year that the tax would cost it $2 billion through 2023.
Previously in October, the American multinational energy corporation Chevron Corp had also warned that taxing oil production goes against the intent of increasing suppliers and making energy more affordable and would only reduce energy supply by discouraging company investments, as its chief financial officer, Pierre Breber, said.