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.
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- 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)
UK Treasury Under Constant Cyber Attacks
“During the last year, we have seen hostile intelligence agencies make hundreds of serious and pre-planned attempts to break into the Treasury’s computer system. In fact, it averaged out as more than one attempt per day.”
George Osborne
“In any given month there are over 20,000 malicious e-mails sent to government networks,” he says.
“During the last year, we have seen hostile intelligence agencies make hundreds of serious and pre-planned attempts to break into the Treasury’s computer system. In fact, it averaged out as more than one attempt per day.”
According to the British chancellor, the recent attacks on Sony has demonstrated the risk of putting more personal and financial information online.
Millions of Sony customers’ personal data including credit card details were put at risk last month when hackers broke into its PlayStation Network.
This illustrates the “challenges alongside opportunities” of digitizing public services, Mr. Osborne points out, and set out an ambition to post online more of the “most valuable data sets still locked up in government services” over the next 12 months.
“This is the raw data that will enable you, for the first time, to analyse the performance of public services, and of competing providers within those public services,” he says.
“A year from now, websites and services will use this data to help the public find the answers to important questions” such as how well hospitals are performing, local teaching quality and progress of criminal investigations, he explain.
The Internet of Things
Mr. Osborne also speak enthusiastic about the “internet of things”, as cars, electricity meters and other devices become connected to the global network.
The government is publishing regulation from a variety of sectors to encourage suggestions for simplification from businesses and members of the public, a scheme called the “Red Tape Challenge”.
All new reforms will be “digital by default”, with ministers forced to explain why new services should be delivered in offline channels, Mr. Osborne says.
“If we think about how internet banking has gone from a standing start to the mainstream in just over a decade, there’s no reason why public services can’t be the same.”
Full story at Financial Times.
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