US oil giant starts EU legal action

One of the United States' biggest oil companies, ExxonMobil, has launched legal action against the European Union over its windfall tax on profits fossil fuel companies have made because of the energy crisis.

The multinational headquartered in Irving, Texas reported a quarterly profit of almost $20 billion in October, largely because of high energy prices attributed to shortages resulting from the Russia-Ukraine conflict.

But company spokesperson Casey Norton told the Reuters news agency the windfall tax on its extra profits could discourage investment and undermine confidence.

"Whether we invest here primarily depends on how attractive and globally competitive Europe will be," Norton said.

The BBC said the company, which is widely known as Exxon, claimed during an investor meeting in early December the new tax would cost it $2 billion.

In its legal challenge, Exxon is saying the EU exceeded its legal authority when it ramped up the taxation of energy companies.

In September when the tax was introduced, European Commission chief Ursula von der Leyen said that major oil, gas, and coal companies should pay a "crisis contribution" to help off set the pain households and businesses were feeling because of skyrocketing fuel bills.

The bloc said fossil fuel giants have been earning around 20 percent more in profits because of the fuel crisis and should pay tax on those extra profits at a rate of 33 percent.

The Financial Times newspaper said the European Commission, which is the executive arm of the EU, had noted Exxon's legal challenge filed at the bloc's Luxembourg-based General Court and that "it will be now up to the General Court to rule on this case". Ironically, the EU has contributed to the high cost of energy by vowing to wean itself off Russian fossil fuels, which has led to it sourcing new suppliers and unwittingly driving up the cost.

The bloc expects to raise 140 billion euros ($149 billion) from companies, including electricity producers, that are making larger-than-usual profits and hopes to divert 25 billion euros toward public revenue for governments across the 27-nation bloc.

The EU has introduced a package of measures aimed at cooling the rising cost of fuel.

In a statement, Exxon said: "Our challenge is targeted only at the counter-productive windfall profits tax, and not any other elements of the package to reduce energy prices."

Exxon said the tax will "increase reliance on imported energy and fuel products" and noted European industries were already facing "a very real competitiveness crisis" and that governments should be focusing on "supporting the production of reliable and affordable energy", rather than taxing energy companies.

Exxon has also been in the spotlight recently in the US, where US President Joe Biden said it "made more money than God".