Energy company Centrica has warned it could keep its Morecambe Bay gas fields shut after planned maintenance as the controversy over the recent tax rise on UK oil and gas production goes on.
Centrica, which owns Scottish Gas, stopped production yesterday from Morecambe Bay north and south as well as its East Irish Sea Rivers field for maintenance work lasting about four weeks.
The Morecambe Bay fields have been operating at the margins of profitability and may not be restarted, according to the group.
Centrica reportedly told the UK Government in March that further investment in Morecambe Bay could be shelved after Chancellor George Osborne’s shock tax rise – leaving Britain more dependent on imports.
Announcing its shutdown plans at the weekend, the firm said: “Centrica is committed to procuring the cheapest available gas for our customers.
“Following the increase in supplementary corporation tax in the Budget, UK oil and gas producing fields are now subject to some of the highest levels of tax in the world – our south Morecambe field is now taxed at 81% (of profits).”
It added: “At these higher tax rates, Morecambe’s profitability can be marginal.”
Centrica said it may choose to buy gas in wholesale markets in preference to restarting the fields.
Morecambe Bay north and south are liable for different rates of tax so will be looked at separately once the maintenance work is complete.
The fields usually produce about 318million cubic feet of gas per day, which accounts for about 6% of the UK’s annual gas needs.
Centrica had previously said it was reviewing a planned £700million investment in the North Sea as a result of the tax rise.
The chancellor’s £10billion tax raid, or £2billlion a year over five years, sparked a huge outcry from the oil and gas industry and has led to a string of firms warning of reduced investment, or – in the case of BP and Shell last week – substantially higher tax bills.
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