Tax hike pushes oil firms to halt North Sea plans

LONDON, Mar 30 (BBC): Two more major oil and gas companies are considering shelving investment projects in the North Sea in the wake of last week's tax hike. Scottish Gas-owner Centrica is understood to be reviewing its current and future developments. Valiant Petroleum also said it has cancelled a project worth up to £93m. It comes after Norwegian company Statoil said Tuesday that it has halted development of two new oil and gas fields worth up to £10b. The Mariner field - being developed with Nautical Petroleum and Italy's ENI - and the Bressay field - owned jointly with Royal Dutch Shell - have combined reserves of 640 million barrels of oil. "The proposed tax change in the UK significantly impacts the economics of these projects," said Statoil spokesman Baard Glad Pedersen. "These are challenging projects, that are more marginal economically, so we need to evaluate how this tax increase impacts them and consider how to move forward from this." Meanwhile two Scottish Liberal Democrat MPs rebelled against the coalition government's North Sea tax hike when it came up for a vote in the Commons on Tuesday night. Malcolm Bruce and Sir Robert Smith - both of whom represent constituencies in Aberdeenshire, which hosts much of the Scottish North Sea oil industry - voted against the measure. The government won the vote by 334 to 13, with most Labour MPs abstaining, and only the Scottish National Party voting against as a bloc. Two Labour MPs, Anne Begg and Frank Doran - also from Aberdeen - opposed the measure. Malcolm Webb, head of the trade body Oil and Gas UK, called for emergency meetings over the £2b windfall tax on the North Sea oil industry, announced in the Chancellor's Budget last week. The industry has claimed tens of thousands of jobs in the UK could go. Graham Stewart, chief executive of Aberdeen-based Faroe Petroleum, said the rise would have an impact. "We're active in Norway, which is known as quite a high tax environment, but they encourage exploration by giving companies tax rebates the year after they've incurred their costs," he said. "The UK's doing quite the opposite, it's making it more difficult for exploration companies. "So it will more than likely cause some degree of movement out of the UK. "I think Norway, from our point of view, is the area we'll focus a bit more on." UK wants to discuss the move with the Treasury and with the government-industry forum, Pilot. It follows the Budget announcement of the £2b tax to fund a fuel duty cut, after a surge in global oil prices. The trade body's economic director Mike Tholen rejected claims that the reduction in corporation tax will balance the loss of revenue. "I'd like to say that was the case," he said. "Unfortunately our corporation tax is 30 per cent basic. We pay 32 per cent on top and that will not change because of the Budget. "So we're still in circumstances where tax goes down for the rest of industry but goes up for us.