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UK North Sea not comparable to Norway
The Stifel report also expressed concern about comparisons made between the UK and Norwegian oil and gas tax regimes.
With productions costs in the UK North Sea nearly double that of Norway there is “less profit to tax”, Stifel said.
With the UK energy industry now making less post-tax cash to pay for continued investment due to the windfall tax, Stifel said the UK’s competitiveness has “already been damaged”.
“Making investments in the UK North Sea uneconomic or limiting the development of resources in the future is not consistent with the structure of the windfall tax and is the opposite of how Norway’s tax system works,” the report said.
Stifel also said there is “no longer a windfall to tax”, with UK gas prices down 95% compared to the peak seen in September 2022.
Stifel said the windfall tax represents a “tax on investor confidence” for any energy or infrastructure investment in the UK, including renewable energy.
According to the report, this loss of confidence in the UK is “damaging the North Sea industry more effectively than the windfall taxes themselves”.
Stifel pointed to Deltic Energy’s Pensacola prospect and Hartshead Resources’ Anning project as examples of two North Sea gas developments which have struggled to progress in recent months due to political and fiscal uncertainty surrounding the windfall tax. Raising the windfall tax would also accelerate the pace of shutdown of platforms and bring forward the share of money the UK government will need to spend on decommissioning, Stifel said.
In the accelerated decline scenario, the report estimates the UK would be importing around 80% of its gas by 2030, up from around 55% currently. With all sources of UK gas supply other than Norway being higher in carbon intensity than the UK’s own production, Stifel estimated the UK would create an additional 35 million tonnes of CO2 equivalent by 2035.
“Therefore, disincentivising investment in the UK North Sea through higher taxes or enforced decline in investment, and therefore reducing domestic gas production, could actually increase overall emissions from UK energy use,” Stifel said.
A new report estimates the introduction of a higher windfall tax on oil and gas firms could lead to the loss of 100,000 jobs industry jobs in the North Sea.
Investment bank Stifel had previously released analysis which estimated 100,000 jobs could be lost under a “worst-case scenario” which assumed the Labour party committing to no new drilling in the North Sea, which it has not yet done.
However this new report from the bank states losses could be incurred by raising the windfall tax to 78% and removing investment allowances, which the Labour party has proposed.
Stifel said this “accelerated decline scenario” could lead to £20bn lower capital investment in the North Sea by 2035, and a £30bn reduction in spending out to 2050.
Based on the Stifel analysis, which shows a strong correlation between North Sea spending and jobs, the report estimates the sector could lose around 100,000 jobs “possibly as quickly as by the next general election in 2029”.
But now, the firm said factoring in recent employment data led it to conclude that in the event of a rapid decline in investment spending, up to half of the current 200,000 jobs employed in the sector could be lost.
The loss of so many skilled workers would “harm the skills base needed for the UK’s energy transition due to the high transferability of skills between offshore oil and gas and floating wind, carbon capture, and hydrogen.
EPL a ‘multi-billion-pound’ paradox
Stifel said raising the Energy Profits Levy windfall tax represents a “multi-billion-pound paradox”.
The higher tax rate would initially generate £6.5bn in tax revenue up to 2029, but would lead to lower tax takings than the current regime from 2030 onwards.
“Over the remaining life of the North Sea, we estimate the UK loses c.£20bn of tax payments if the UK North Sea is forced into this accelerated rate of decline,” the report states.
Under this scenario, Stifel forecast that the UK would see its competitiveness for investment “dramatically eroded further”, with investment “almost completely ceasing” by the early 2030s.
New report finds North Sea ‘could lose 100,000 jobs’ under Labour windfall tax plans
Stifel has raised its estimate after previously saying 100,000 would only be lost in a "worst-case scenario".
https://www.energyvoice.com/oilandgas/north-sea/553700/new-report-finds-north-sea-could-lose-100000-jobs-under-labour-windfall-tax-plans/
Voice The buybacks were introduced to add shareholder value, that’s the whole point of these buybacks ffs
Of course I’m emotionally attached it’s my money that’s invested who wouldn’t be.
Kraken on lack of credit - completely agree
But if enq has taught us anything its patience and a willingness to hope!!!
Tigar sorry thats just nonsense - illegal and also nonsense - its a small/tiny buy back - there’s just zero cost/benefit that works for them there - and lets be clear trading £50k a day on a buy ack and saying to anyone half decent ‘this is an excellent opportunity for you to get in would have them laughed out of office’
Dividends should have been the way to go there’s nothing stopping the sp collapsing even with the buy back. At least with dividends shareholders see a real return.
What gets up my nose more than anything else is the fact we have never been rewarded by this market for our debt reduction and our strong performance over the past 4 years. Not a single Analyst pointed this out, they have always twisted news into a negative. Why ?
Both Jefferies and Barclays have given us negative reviews and not once pointed out our potential or the start of SHR
We could do with AB showing ML how to buy stock
Will AB consider: https://www.offshore-technology.com/news/chevron-uk-north-sea-exit/?cf-view
Share buy backs are very low at the moment why, 1. it could be ML are letting in some clients before pulling the trigger? could be they are trying to work the price down to pick up panic sellers? could be they will let it rip for a few pence and draw out those sitting on the edge trying to trade who will sell up thinking they can buy back cheaper? they will buy and debt will continue to fall so SP will respond. I think 1. is very likely.
"Only one barnacle remains on Starmer’s boat. We were reminded of it when Ed Miliband came on stage like a Shakespearean comedy interlude character, to talk about a net-zero domestic energy sector by the end of the decade. British renewables are cheaper, he intoned – and more secure. This is nonsense, as even the Tony Blair Institute admits. An all-out dash for renewables, it concluded in a report only yesterday, “could increase energy costs or reduce energy security, with major economic and social consequences for the country.” Quite.
So Miliband’s plan would be a disaster, but one that’s unlikely to be ever attempted because it would quickly dissolve on contact with reality. Gary Smith, head of the GMB union, once told me that he doesn’t bother worrying about Miliband’s plan because it’s so obviously impossible.
So why is the policy still there? Perhaps because Labour fears the Greens (who may run them close in Bristol) and needs to keep some delusions going. But the £28 billion-a-year green spending plan, for years the signature Miliband policy, is now abolished – so it may seem cruel to take away what little there is left."
Gary Smith's comment is reassuring.
Miliband is toast if he roasts jobs and Starmer doesn’t have enough £ to do his good works …. T to he unions will demand higher pay and Starmer will increase Taxes … Wealth Tax of some sort will appease the unions imho so ABs approach to invite the unions onboard is a shrew move imho : https://www.economicsobservatory.com/can-uk-trade-unions-recover-their-post-war-power
We're a political football. We need something to come to our rescue. Does pragmatism ever beat expediency? The costs of renewables are real and cannot be ignored forever. Energy security is a meaningless phrase but neither party will address it seriously until the election is over.
The Hunt saying the below, at this point is right. Leave aside it was the Tories who imposed, reimposed and reimposed the Windfall Tax, who got us where we are now, he is right now with what he says below. Why would the Tories cut the tax now? It would widen the policy gap, but probably the Tories don’t want to do that, and it would not change investment decisions. It’s all up to Labour’s choices now.
“However, the Chancellor is understood to have made no promises to change tack – pointing out that Labour’s threats to increase the windfall tax by another 3pc and to cut investment allowances should they win the election, were the key deterrent to investors.
I’ve decided the potential here is just too great to cash out at 20p. Once the net debt is at say the 0.3 level will not be far away this will be unstoppable.
Chevron’s announcement yesterday is a massive wake up call Jeremy reputation is going to be completely destroyed if he does listen quick smart.
Patience this is a sleeping giant
I like the use of "cargo-cult scientism" (I had to look it up). It fits perfectly. Especially this from wikepedia:
"pushed for the revival of ancestral traditions or the adoption of new traditions (often in the form of ritual acts like dancing, marching and flag raising) in order to appease ancestral spirits."
It describes juststopoil and Green activism.
*I think all UK political parties have tied themselves into knots by thinking populism and purple hair was the way forward, a vote winner. You can't fool all of the people all of the time. Like Canute; they can't stop the rising tide of renewable costs.
Btfath1 - 100% with you - been disappointing not to see an upward curve but at a minimum the buybacks are getting rid of some sellers which (ever so slowly) will have an effect. One thing is for certain if the buybacks were not happening the stock would be lower (simple demand and supply equilibrium)
I am still hoping we’ll see accelerated buying into msci rebalance as its not exactly rocket science that the buyback at current rate wont complete
But all in all i am happy buyback is going and my positive head says ‘eliminate some sellers and we will see some effect’
Kraken i know you are emotionally invested in ENQ but blaming ML for their buybacks is like having a go at a train driver for sticking to a timetable.
This buyback is just so insignificant to them in the scheme of things - they will be doing exactly what they agreed with ENQ - no more no less. And the talk earlier of them pushing down prices for buyback are just so ludicrous i cant even begin to deal with them.
Definitely willing to take a bet against you on that if you want. I know i might not like labour that much personally but that type of view is just for the daily express. While markets clearly do get affected by governments the hard truth is it isnt as much as people like to think. Ultimately we’re more likely to dive on us election results that uk (as trump will probably bankrupt the us on his tax plans alone)
Just ENQ being ENQ.
When we hit 20p im out. Been here seen 2017
Been busy in work and not had the chance to check the sp action and what on earth it is doing down here???
We were just about to attack 17p a few days ago.
Well at least the buybacks purchases are going through at bargain basement levels.
Looking forward to a move into the early 20’s with the next update.
Have a good weekend all 😎
Is disaster for the financial market.
FTSE will drop 10-20%
Might as well throw this in too - "Subsidies for generating green energy will be cut by €1 billion a year"
Remind me - how much are we cutting them by?