According to the Oil & Gas Authority, reported in Energy Voice, today, North Sea producers have been able to cut their costs by 14% to around $12 per barrel. Between 2014 and 2016, costs fell by 25%. We heard in September, BP CEO Bob Dudley say:
‘This focus on standardization, simplification and discipline on cost has contributed to our average production costs in the North Sea coming down from a peak of over $30 a barrel in 2014, to less than $15 a barrel today. Heading towards 2020, with all our major new developments coming into production, we expect that to come down below $12 a barrel in the North Sea.’
See this for more detail:
The scope for raising revenue from this level of profitability is clear yet the UK government seems inexplicably hesitant to tax the oil companies. It’s hard to find any other plausible explanation other than that offered in 2016 by the International Transport Workers’ Federation and reported in Tax Justice:
‘New analysis of the UK’s North Sea oil and gas suggests that the combination of tax giveaways by the government, and aggressive avoidance by multinationals, means that the country may actually be subsidising the extraction of its natural resources. A new report published today by the International Transport Workers’ Federation (ITF) sets out a series of shocking statistics on the UK’s failure to obtain an appropriate share of its own resource wealth. Among them, these stand out:
- In 2014, UK consumers paid 6 times more tax on petrol, excluding VAT, than the North Sea oil and gas industry paid on all taxes related to production.
- Chevron’s effective tax rate in 2014 on earnings from North Sea production was 5.4%; statutory tax rates (of various types) on oil and gas should have totalled 61-82%.
- In 2014, 3 (Shell, BP & Total) of the top 4 North Sea producers produced more than £4.3 billion worth of oil and gas and received over £300 million in net tax refunds.
The ITF argue that while the oil sector has successfully lobbied for and won huge tax breaks from the UK government, the companies involved continued to pursue aggressive tax avoidance as standard practice. The Chevron report (see graphic for UK structure, click to enlarge) provides a detailed case study of tax dodging tactics which are replicated by others, particularly Nexen – on which the Times had a frontpage splash yesterday, using ITF analysis to show that the Chinese government-backed company received tax credits of £2 billion.’
A fuller account is here:
Is this a scandalous strategy, still there three years later, to undermine the Independence movement at any cost?