Statoil Cancel $10 Billion Projects In The UK

Statoil has put on hold two oil and gas projects in UK waters worth more than $10bn because of the government’s increased tax on oil production, the Financial Times reports. The Norwegian group said the tax rise, announced by George Osborne, chancellor of the exchequer, in last week’s Budget, was a “substantial setback” to the North Sea oil industry.

“The proposed tax change significantly impacts the economics of these projects.”

Statoil

 

It would “pause and reflect” on the future of its Mariner and Bressay fields to the south-east of Shetland in light of the decision, Statoil says in a statement: “The proposed tax change significantly impacts the economics of these projects. These are challenging fields, which were already economically marginal, so we need to assess how this tax increase impacts them and consider how to move forward.”

 

Statoil says it has been close to awarding engineering and design contracts for the Mariner field but this will now be suspended.

Mariner and Bressay hold several hundred million barrels of recoverable oil and Statoil have said erlier that their development would generate more than $10bn of investment.

Mr. Osborne dismissed suggestions that his £2bn tax grab on the oil industry would hit exploration: “Our expectation is it will not damage investment.”

The chancellor defends his plan to take money from the oil industry to keep down prices at the pump and dismiss warnings from MPs on the House of Commons Treasury committee that the move could cost thousands of jobs in the sector.

“With current oil prices, the prospects are for increased investment,” he says. “It’s still very profitable to invest to exploit these resources.”

Mr. Osborne said taxes on oil groups would decrease if the oil price fell to about $75 a barrel and would be recouped by a reintroduction of the fuel duty “escalator”, which progressively increases fuel duty.

The supplementary tax rate levied on oil and gas production has risen from 20 per cent to 32 per cent. This has increased the effective tax rate to at least 62 per cent, with some fields facing 81 per cent.

Statoil is to meet Treasury officials but Mr Osborne says it pays higher taxes in Norway.

 Well…technically, yes. However Statoil is in principle, and practice, run by the Norwegian government who also is the major shareholder. There’s lot’s of hidden subsidicies in the Statoil system, so that issue is almost irrelevant.

  

Related Articles

• Statoil North Sea Oil firm in pullout over George Osborne’s budget tax (dailymail.co.uk)
• Statoil halts North Sea oil development over windfall tax (guardian.co.uk)
• Oil giant puts £10bn North Sea development on hold after Osborne’s tax raid (dailymail.co.uk)

“Storm the Banks”

I was just walking to Foyles bookstore, and on my way I met a bank with smashed windows, and the bank was marked with “Storm the Banks”…

Espen Gaarder Haug

People are getting angry, big banks got bailed out, and there is little moderation in the bank bonuses for the bailed out banks,  and young people are not finding jobs.

“Let badly managed banks go bust, let people who are better at running banks and that better understand risk take over.”

I would also say take a close look at the monetary system, and the monetary policy!

Too bad my camera is out of battery.

“Gresham’s law: “Bad money drives out good if their exchange rate is set by law.” Do this “law” also apply to banks: Bad banks drives out good ?”

Conservative banks that keep plenty of reserves are not able to expand that much in the credit boom and are loosing market shares to banks with no risk aversion.

The risky banks are more likely to expand enough to get too big to fail, and are therefore also more likely to get bail out money…

Well the Gresham law can also go in reverse, but that is typically first when things get really ugly.

From The Collector’s Blog.

Regular contributor of the EconoTwist’s

(www.wilmott.com)

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Anti-Austerity: London’s Burning

The old classic hit by Clash “London’s Burning” comes to mind reading the news report from London this afternoon. More than 250.000 people have attended a march and a rally in central London against public spending cuts. But small groups attacked shops and banks with a stand-off in Piccadilly. There have been 202 arrests and 35 people injured, including five police, according to BBC.

“We will fight the savage cuts and we will not let them destroy Peoples’ services, jobs and lives.”

protester

The main march was organised by the British Trades Union Congress (TUC), who also helped organizing last weeks protests in Brussels. Labour leader Ed Miliband addressed the crowds in Hyde Park, the largest public protest since the Iraq war rally in 2003, saying : “The Tories said I should not come and speak today. But I am proud to stand with you. There is an alternative.”

TUC general secretary Brendan Barber was first in a line of speakers:

“We are here to send a message to the government that we are strong and united,” he said.

“We will fight the savage cuts and we will not let them destroy peoples’ services, jobs and lives.”

The TUC, which organised the event, says that more than 250.000 people had taken part in the protest,  the Metropolitan Police confirm the numbers.

BBC political reporter Brian Wheeler, in central London, says there were lots of families and older people, and the atmosphere was good-natured but the anger was real.

“The noise in Whitehall was deafening as thousands of protesters banged drums, blew whistles and shouted anti-cut slogans, slowly making their way towards Trafalgar Square,” he reports.

Adding: “The crowds were booing as they went past Number 10, but the demonstration was good-natured and friendly.”

“There are hundreds of trade union banners, but we have also spoken to public sector workers who have come to make their voices heard.”

One of those protesting was Peter Keats, 54, from Lowestoft, Suffolk, who works for Jobcentre Plus.

He says: “Personally, “I think it’s wrong the way we are hitting the poor. I’m not so much worried about myself but the customers I deal with are vulnerable and I’m worried about them and I’m worried about the kids of this country.”

Demonstrator Christine Nugent, a university research fellow, says: “The size and scale of it, and the range of people here, is great.”

The veteran of anti-Margaret Thatcher demonstrations in the 1980s said protesters came from all walks of life, adding: “There are a lot of trade unionists here, but it’s not just the usual suspects.”

There have been separate incidents involving a number of protesters, some with their faces covered by scarves, away from the main march:

• A sit-in organised by the campaign group UK Uncut took place at Fortnum & Mason department store in Piccadilly. The group has previously mounted protests against tax avoidance measures by big businesses
• A bonfire was lit by protesters at Oxford Circus, where earlier police said light bulbs containing ammonia were thrown at officers
• Topshop on Oxford Street had its windows smashed and was doused with paint
• Missiles were thrown at the Ritz Hotel, Piccadilly
• Bank branches including the Royal Bank of Scotland were attacked with paint and had windows broken, while branches of HSBC and Santander were broken into.

Scotland Yard says there had been 202 arrests for public order offences, criminal damage, aggravated trespass and violent disorder.

Mr Barber was followed by Mr Miliband, who said: “The Tories said I should not come and speak today. But I am proud to stand with you. There is an alternative.”

The march began at 1200 GMT and it took more than four hours for the protesters to file past the Houses of Parliament on their way to the park.

But small groups attacked shops and banks with a stand-off in Piccadilly. There have been 202 arrests and 35 people injured, including five police.

Ministers say the cuts are necessary to get the public finances in order.

Commander Bob Broadhurst said: “The main TUC march has been going well. We have had more than a quarter of a million people with hardly any problems. Unfortunately we have had a group of approximately 500 criminals committing some disorder including throwing paint at Topshop in Oxford Street and at the police, and scaring the public who are trying to shop.”

Policing minister Nick Herbert said the government was “committed to supporting peaceful protest” and blamed the violence on “a small minority of individuals”.

Mr. Miliband condemned the violence, saying: “There is no excuse for it. It is unlawful and wrong.”

Civil rights group Liberty said the march had been “infiltrated by violent elements” who attacked buildings before “melting into the demonstration once more”.

Earlier, the largest union involved, Unite, says so many of its members had wanted to take part that it could not find enough coaches or trains to ferry them to London.

Related Articles:

• Anti-cuts demo: Protesters occupy Fortnum & Mason as half a million march on London (dailymail.co.uk)
• Up to 500,000 attend anti-cuts demo (mirror.co.uk)
• In London, 250,000 March Against Austerity Plan (online.wsj.com)
• LONDON: Half-A-Million People March In Protest Against Government Austerity Cuts: UPDATED (lostchildreninthewilderness.wordpress.com)
• The Guardian: March for the alternative sends a noisy message to the government (guardian.co.uk)
• BREAKING NEWS: LONDON: Hundreds Strong Mob Attempt To Hijack Peaceful Anti-Cuts Protest (lostchildreninthewilderness.wordpress.com)