Comments: Squeezing the last drop of tax from the barrel

The oil company tax change just looks like a mistake. But it’s possible the large, multinational oil companies that control the older North Sea oil fields had no intention of putting in the development investment needed to extract the last drop from these fields anyway. The multinationals have limited technical resources and they will concentrate their efforts where it will give the best return – definitely outside the North Sea.

A possible beneficial outcome could be that the multinationals will sell their interests in North Sea fields to smaller oil companies. Other companies may be in a better tax position than the multinationals. Gordon could encourage UK employment and R&D by giving tax breaks to these smaller, start-up oil companies. But he will have to be very lucky indeed for this to work out in the UK’s favour.

Posted by Sandid at December 12, 2005 01:38 PM

A good speech this week by Governor Ian MacFarlane about global interest rates, exchange rates and 'the Australian model':

Posted by Sandid at December 15, 2005 06:37 AM

Sorry to quote this article from The Business but:

"Shell blames Brown for its new North Sea cuts

ENERGY giant Shell has slashed investment in its future North Sea oil drilling programmes by a third, blaming the doubling in oil production taxes announced by Chancellor Gordon Brown in his recent Pre-Budget Report.
Graham Tran, regional organiser at trade union Amicus, said: “I will be writing to the energy minister Malcolm Wicks on Monday to ask him to use his department’s power to make Shell identify which licence blocks the company is now no longer planning to drill.

“If there are any blocks that fall under the government’s new initiatives to protect North Sea investment, we should set the clock ticking and get them out of Shell’s hands as soon as possible.” The DTI strengthened its powers over North Sea oil companies earlier this year.

The new system means any block undrilled for two years has to be handed back to government. The process was designed to ensure older North Sea blocks would be developed to their full potential by speeding up the programme of UK asset sales that the majors began several years ago."

Perhaps Gordon has a cunning plan to start the sales early.

Posted by Sandid at December 18, 2005 06:52 AM