34 North Sea projects put at risk

Chancellor Gordon Brown has put 34 North Sea projects worth more than £3bn at serious risk, according to the oil industry. The UK Offshore Operators’ Association said this week that Brown’s Budget decision to continue with a review of the North Sea taxation regime for a further year had already damaged investment prospects. A spokesman […]

Chancellor Gordon Brown has put 34 North Sea projects worth more than £3bn at serious risk, according to the oil industry.

The UK Offshore Operators’ Association said this week that Brown’s Budget decision to continue with a review of the North Sea taxation regime for a further year had already damaged investment prospects.

A spokesman said the 34 projects that UKOOA members were planning over the next five years were now at ‘very, very serious risk’.

Heinz Rothermund, managing director of Shell Expro, said the company would not stop developments already under way but would look again at those in their early stages.

One likely casualty is the BP-operated Clare project off the west coast of Scotland a £700m-plus development that would have required two large traditional steel platforms. The project would have sustained up to 2,000 jobs in offshore yards just as they faced a downturn in work towards the end of the year. ‘It is difficult to see Clare being given sanction due to the uncertainty surrounding the tax situation,’ said a BP spokesman.

‘I think the contractors and suppliers will start to feel the pain quite quickly,’ said UKOOA’s spokesman. He said operator cutbacks would also hit operational spending in the North Sea.

UKOOA said the changes under consideration to extend petroleum revenue tax to post-1993 fields and to hit oil companies with a supplementary corporation tax would yield the Exchequer an extra £500m £750m a year. Analyst Wood Mackenzie estimated the measures would wipe up to £3bn off the value of oil company assets.

News analysis page 14