It was not a bluff. When Centrica warned a month ago that it might choose to leave one of Britain’s biggest gas fields off-line because of the higher taxes levied on UK energy companies, some thought this was an empty threat.
However, South Morecambe gas field has become available after a period of routine maintenance – and Centrica chose to leave it dormant on Wednesday morning.
Oil and gas operators in the North Sea have ramped up their lobbying efforts to persuade the government to reverse, or at least dilute, its tax hike on those companies to pay for the cut in fuel duty.
Early on Wednesday Oil & Gas UK, the industry’s lobby group, produced figures showing confidence among producers in the area had slumped.
On a scale from 1 to 100, with 50 being neutral, overall confidence dropped 12 points to 51. For E&P companies, the fall was particularly pronounced, with a 25 points drop to 46, the lowest ever for the sector. Confidence among major producers, meanwhile, was 21 points lower at 39.
The tension between oil companies and George Osborne surrounding North Sea oil taxes has deepened.
But Statoil’s decision to put two projects on hold represents only one part of this clash. The other is from investors, who warn that it is not just current projects that are under threat, but long-term investment.
Image by Shell
In this week’s readers’ Q&A session, Peter Voser, the chief executive of Shell, answers your questions.
In the first of two posts, he addresses when and how the next oil price shock might happen, the future of the North Sea and why Shell left the Falklands.
In the second post, published above, he discusses the future of natural gas, the controversial process of “fracking” and why biofuels are the answer to powering transport.
Next in the hotseat is Chris Huhne, the UK energy secretary, who will be answering your questions on electricity market reform next Thursday, December 23rd. Send in your questions for consideration by the end of today – Friday, December 17th – to email@example.com.
But for now, over to Peter: