High Costs, Taxes Hitting UK Oil, Gas Developments - Execs
ABERDEEN, Scotland Sep 4, 2007 (Dow Jones Newswires)
High costs and taxes could prevent development of some of the U.K.'s remaining oil and gas resources, even in areas where significant new discoveries are still being made, senior oil industry executives said Tuesday.
"We are heading in a direction that will see sub-optimal development of gas our country desperately needs," said Frank Chapman, Chief Executive of U.K.-based BG Group PLC (BRG) at an industry conference in Aberdeen, Scotland.
"We need to gear the fiscal regime around exploration," he said. If current high tax levels in the U.K. persist, remaining oil and gas resources which are often difficult to exploit are not going to get drilled because the high capital investment may not be recovered, he said.
Total SA (TOT) announced another significant gas discovery Tuesday West of the Shetland Isles north of Scotland.
Untapped gas fields West of Shetland are thought to contain up to 17% of the U.K.'s remaining reserves, or 3 billion-4 billion barrels of oil equivalent, but development will be expensive because the area has no existing gas infrastructure and fields are located in deep, rough seas.
Robert Olsen, Production Director of Exxon Mobil Corp. (XOM) said despite months of discussion between government and industry, there is still no viable plan for development of the gas resources West of the Shetland.
ExxonMobil, Total SA (TOT) and BP PLC (BP) and other license holders have been looking at plans for joint infrastructure development in the area, but Olsen said the commercial justification for development has not yet been found. "The North Sea is one of the highest cost provinces in the world," Olsen added.
David Cairns, energy minister at the U.K. government's Scottish Office, denied the current tax regime was making the U.K. oil and gas sector uncompetitive. He said the government is committed to encouraging further development of resources in the North Sea and there will be no change to the tax regime during the current parliament, which could run up to 2010.
Copyright (c) 2007 Dow Jones & Company, Inc.
Operates 32 Offshore Rigs
- BP: 2017 'Massive' Year for Global Upstream Projects (Dec 07)
- BP Seeks Stake In Cairn Energy Senegal Assets (Nov 20)
- Officials: BP, Eni Interested In Developing Iraq's Majnoon Oilfield (Nov 20)
Company: Exxon Mobil Corporation more info
Operates 15 Offshore Rigs
- ExxonMobil Jumping in to Mexico Fuel Market With First US Cargo (Dec 06)
- ExxonMobil to Evaluate Offshore Mauritania Blocks (Dec 04)
- ExxonMobil To Merge Refining And Marketing Divisions (Dec 01)
Company: Total S.A. more info
- Total Starts Up Antwerp Refinery And Petrochem Complex After Upgrade (Nov 30)
- Hoegh LNG: Pakistan LNG Import Project Consortium Folds (Nov 16)
- France's Total Buys Engie's LNG Business For $1.5B (Nov 08)
Company: BG Group more info
- Shell Mulls LNG-Hub Network as Use by Ships and Trucks Expands (Jul 11)
- Tanzania Laws Would Allow Govt to Tear Up Mining, Energy Deals (Jun 29)
- Despite Cuts, Big Oil to Expand Production into the 2020s (Sep 05)