Discussion in 'Current Affairs, News and Analysis' started by retired_taz, Jun 3, 2011.
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This is an interesting slant on oil taxation.
A taxing problem in the North Sea - Telegraph
Nothing new here, oil companies do this all the time regardless of government taxes. When the dpb are up they will increse production and when it is down, rest on there laurels. I'm not sure how low the price of oil has to go before they work at a loss, but they arent anywhere near working at a loss right now, more like they just want the govt to **** off this tax they've imposed on them.
The forties field, for example, is still one of the highest producing fields in the north sea at 732,000 barrells per day and is currently constructing a new wellhead platform to be bridged from its Forties alpha platform. They aren't planning on shutting anything down in a hurry.
They are still making mega profits regardless of govt taxes. I think they would like us to beleive they are struggling though, as they know how important north sea oil and gas is to the govt.
The tax was a political stunt from the start. Gideon Osbourne knew that the oil companies would just charge more for fuel but the proportion taken in direct taxation on fuel was reduced. he would look good and oil companies would be reviled for increasing the price to cover the tax.
As for the gas field, surely no-one expects a politician to see beyond the end of their own ideas.
Geography is not the Telegraphs strong point?
I also think the area was closed for maintenance. I can't see them keeping it closed for too long unless they get ride of all the crews who work the area to save money. It would then be expensive to reopen when the price goes up. All those crews will have to be retrained and re-qualify to work off shore.
No problem Our friends from Eastern Europe will keep pumping gas to us I'm sure.
You're making the same mistake Gordon Brown made in 1997 - oil is not a utility and the UK Continental Shelf (UKCS) can't pass the tax on to the consumer in the way you describe. What's being argued over is what share of the oil price - a global phenomenon (ish), should go to the Treasury. You won't see this argument reflected in higher prices at the pump but what you will see is a decrease in investment in the UKCS - this means oil gets left in the ground and fields are decommissioned earlier. That has implications for the UK's balance of payments and, if you are a contractor or a supplier, then it's going to hit your balance sheets too and that's where the bulk of the oil and gas employment in the UK is. It's a difficult balancing act because the North Sea has traditionally relied on a lower tax take to off-set the higher Opex and Capex associated with the province. If you get the balance wrong in one direction, big oil pockets a windfall. Get it wrong in the other direction and the investment goes elsewhere and the UK loses out. Essentially, all the Operators start with a big map of the world and decide where they're going to invest, balancing returns with risk. What Osborne has done is significantly alter the returns part of the equation, albeit with an intelligent readjustment mechanism, and that is bound to impact on investment. To be happy that he is somehow sticking one on big oil as some commentators have done is simply ignorant. The Operators are international and can relocate very quickly - there's no such thing as a poor oil company, it's the UK firms in their supply chains, who aren't as mobile, who get walloped.
If you mean the South Morecambe field, it's true that the gas comes ashore not from the North Sea, but at Barrow in Furness. However, Barrow is operationally classed as 'North Sea'.
There are 3 terminals at Barrow, (South Morecambe, North Morecambe and Rivers), - the other 2 will continue to produce so the South terminal would still be ticking over.
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