North Sea oil groups reconsider strategies

first_img whatsapp KCS-content Sunday 27 March 2011 11:36 pm Share OIL FIRMS in the North Sea remain lucrative, a report out today claims, despite a number of firms hastily rewriting their strategies in the wake of the shock North Sea oil profit tax announced in last week’s Budget. Independent firms such as Premier, Nautical and Encore have a strong enough financial base and approach to risk to give “spectacular returns”, according to Edison Investment Research. Smaller companies can develop blocks that have been left by the oil majors as the North Sea reserves dwindle, Edison said. But the majors might find it problematic to exit the region since the tax hike made mature fields less lucrative, analysts warned. ConocoPhillips and ExxonMobil yesterday declined to comment on reports at the weekend that they had shelved plans for a North Sea asset sale following the tax hike. The two firms put assets worth an estimated £800m on the market last year.BP also put all of its operated gas fields in the southern North Sea on the market in February, with a reported asking price of £600m.The Chancellor raised the supplementary charge for profits in the North Sea from 20 to 32 per cent in last week’s Budget to fund a 1p per litre fuel tax cut and a fuel stabiliser, which absorbs some of the cost of higher oil prices. Firms with older fields face a marginal tax rate of 81 per cent, experts forecast, as fields drilled before 1993 must pay a 50 per cent petroleum revenue tax. Other companies will have a corporation tax rate of 62 per cent. The UK government made £6bn in revenues from oil and gas production in 2009 / 10, according to figures from HM Revenue & Customs This was the lowest sum for five years, despite oil prices edging closer to the all-time highs seen in 2008. The government said it expects to make around £2bn a year from the tax hike, though the Treasury will this week meet with industry groups to try and lessen the impact on companies with the biggest exposure to the North Sea, in an attempt to stop investors from leaving the region. The North Sea has around 21bn barrels of oil left to extract, after producing 39bn barrels since the reserves were first drilled in the 1960s. Last week’s Budget introduced plans to restrict tax relief for the costs of decommissioning from 2012, which Edison said could encourage firms to simply abandon rigs once the oil dries up. However, around 65 per cent of businesses think raising taxes for the oil industry is a positive step, according to a survey of 620 company directors by the Institute of Directors released at the weekend. center_img North Sea oil groups reconsider strategies Show Comments ▼ whatsapp Tags: NULLlast_img read more

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