EnQuest warns over North Sea tax increases

Image caption, EnQuest warned that investment in smaller fields could be "uneconomic"

A firm which operates in the North Sea has become the latest to criticise tax increases on oil producers.

EnQuest, which made more than 拢100m in profit last year, said the rise was "very disappointing".

The company's share price has dropped by 13% since the tax hike was announced in the Budget.

It warned the investment in some smaller fields could be "uneconomic", although the group said it was confident about long-term prospects.

Chief executive Amjad Bseisu said: "The increase in tax rate does not create a positive climate for additional investments."

He added: "Nonetheless, there remains significant potential in our development and production programme and EnQuest is confident of its ability to deliver not only its 2011 targets, but also its medium and longer-term growth objectives."

The government raised the supplementary tax on North Sea oil production to 32% from 20% in the Budget last month to fund a 1p cut in fuel duty.