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Row over windfall tax on offshore drilling provokes possible closure of field that produces 6% of nation's gas.

http://www.guardian.co.uk/uk/2011/may/0 ... ecambe-gas

Did Osborne just lock out much of the remaining indigenous oil and gas reserves?

Mean Mr Mustard wrote:Row over windfall tax on offshore drilling provokes possible closure of field that produces 6% of nation's gas.

http://www.guardian.co.uk/uk/2011/may/0 ... ecambe-gas

Did Osborne just lock out much of the remaining indigenous oil and gas reserves?

Doubt it, but if he did - isn't that what you wanted?

Not if we're just going to end up importing it.

RenewableCandy wrote:Not if we're just going to end up importing it.

As we approach peak - we become 'supply-side limited'. This means that a drop in supply anywhere, is a global drop in supply. Post peak, supply is a zero sum game. So ultimately we can't just import it, that option is only open pre-peak.

But we can end up just importing it this year. If today's market price plus taxes suggests that it will cost Centrica just a little bit more to import than produce Morecambe Bay (the Treasury having done their sums carefully to not quite price production out of the market) then Centrica might just judge that it will be more profitable in the medium to long term to import now, foregoing some short term profit, in the expectation of making a killing in the future when world prices are higher but they are still sitting on a tankful under Morecambe Bay. And they get to score one over the government to frighten them off any further tax hikes.

The treasury may have been dumb enough not to see this one, or they may have been really smart and deliberately predicted Centrica's response knowing that it is actually in our long term best interest to keep the gas underground for now. And they get to score one over Centrica by saying they are bad guys.

As for the truth, I don't suppose anyone knows - it's all just a cock-up.

biffvernon wrote: The treasury ... may have been really smart and deliberately predicted Centrica's response knowing that it is actually in our long term best interest to keep the gas underground for now. And they get to score one over Centrica by saying they are bad guys.

A plan so cunning you could paint it red and call it a fox!

RenewableCandy wrote:

biffvernon wrote: The treasury ... may have been really smart and deliberately predicted Centrica's response knowing that it is actually in our long term best interest to keep the gas underground for now. And they get to score one over Centrica by saying they are bad guys.

A plan so cunning you could paint it red and call it a fox!

Blackadder said:

"I've got a plan so cunning, you could put a tail on it and call it a weasel." or "As cunning as a fox who's just been appointed Professor of Cunning at Oxford University."

Yup, I really do think HM Treasury, and whatever the Energy Department call themselves this week, have jointly carefully considered this masterstroke of long term strategic post-peak taxation and declining resource management policy. Obvious, innit.

Mean Mr Mustard wrote:Row over windfall tax on offshore drilling provokes possible closure of field that produces 6% of nation's gas.

I was amazed that the field produces 6% of the nation's gas. Even if it is shut down ... it's hard to imagine that would be permanent.

http://www.telegraph.co.uk/finance/news ... ustry.html

"Oil and gas leaders will on Wednesday make a last-ditch effort to persuade the Government to abandon a £10bn tax grab on North Sea energy companies, amid warnings the levy will "utterly destroy" the industry."

Chapman said: "Because the UK fiscal burden has increased, you wouldn't be surprised to hear that (North Sea) projects have moved further down our order of priorities. As far as the UK is concerned, this is the third change to the fiscal regime in a relatively short period.

"Ours is an industry where very substantial investments are made in order to produce returns over a long period. But we are concerned about the volatility of the British fiscal environment."

http://www.guardian.co.uk/business/2011 ... ndfall-tax