BP will proceed with all its current North Sea projects despite Britain hiking taxes for oil producers, but will look closely at its other plans, while rival oil major Shell said it is evaluating its UK portfolio.
“None of the immediate projects that BP have coming off the blocks now will be stopped as a result of the tax increase, but clearly we need to look very hard at the viability of some others,” BP’s UK head Peter Mather told the UK Energy and Climate Change Committee on Tuesday.
Shell Vice President David Loughman said the company was reassessing its plans following a 12 percent rise in the supplementary tax change imposed by the British government in March.
“We’re evaluating the portfolio at the moment in the context of the change,” Loughman said, adding that smaller fields are most likely to be challenged by the change to the fiscal rate.
In the wake of the unexpected tax hike, Norway’s Statoil said it was suspending $10 billion worth of projects.
Mather warned the committee, who were meeting to discuss the security of the UK’s fossil fuel supplies that the government must stick to its pledge to reverse the higher tax rate if the oil price falls below $75 per barrel.
“Whilst prices are a little bit higher than they have been, they could well come down and I think this level of taxation with lower oil prices would be very bad for the North Sea,” he said.
BP, which is one of the biggest producers in the North Sea and has committed to investing 10 billion pounds ($16 billion) in the basin over the next five years, said in April it was taking a $683 million writedown on its UK North Sea assets as a result of the hike.
