16th February 2010
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UK should expand tax incentives in the North Sea - Shell
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The U.K. should expand tax incentives to producing oil and natural-gas fields in the North Sea to increase output, said James Smith, chairman of Royal Dutch Shell Plc’s U.K. office.
The U.K. plans to make more deposits eligible for tax incentives, Chancellor of the Exchequer Alistair Darling said Dec. 9. The changes could support an additional 300 million barrels oil equivalent of crude and gas production.
“It’s a good start, but I don’t think it will be enough,” Smith said yesterday in an interview. “Using the same tool more extensively is going to be very important for getting an extra amount from the North Sea, particularly from brownfield areas.”
Once the world’s fourth-largest oil and gas producer, output in the U.K. has fallen since 1999, in part because of lower investment in exploration. Drilling fell 37 percent last year because of financing constraints and oil-price volatility, Wood Mackenzie Consultants Ltd. said in a report last month.
The U.K. government said Jan. 27 that it plans to introduce measures including tax relief to increase development of remote fields in the West of Shetland region. The area may contain about 20 percent of the U.K.’s remaining oil and gas reserves.
The tax incentives “are helpful in certain specific areas, such as West of Shetlands, high pressure -- high temperature fields, and in heavy-oil fields,” Smith said.
Total SA, Europe’s third-largest energy producer, has sought tax breaks before proceeding with the $3 billion Laggan Tormore gas project west of the Shetland Islands, Yves-Louis Darricarrere, head of exploration and production, said Dec. 1. Christophe de Margerie, Total’s chief executive officer, said Feb. 11 that investment decisions on the Laggan-Tormore development would be made by the end of this year.
by Enresol Information Desk |
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