North Sea tax hike deters explorers

30th Mar 2011 14:08

Norwegian oil giant Statoil has stopped work on two projects in the North Sea following a tax hike on oil fields announced in last week's Budget, and others are set to follow.The state-owned firm says it is considering what to do with its Mariner and Bressay fields, while Centrica, which owns Scottish Gas, is said to be mulling the future of its developments.Valiant Petroleum, the £200m AIM-listed explorer, has already shelved work worth £93m after chancellor George Osborne increased tax on oil fields to 62% to fund a 1p a litre cut in fuel duty.There are worries that many companies may lose interest in a number of small fields, putting jobs at risk."The proposed tax change has significant impact on the project economics of Mariner. We have to pause and reflect to evaluate what impact this will have and consider how to proceed after this," Statoil said."This is a project about to be developed. With this tax increase, there is a substantial impact." LW