RE: AGCC rebuff Shanks on North SeaToday 14:16
My first thought/hope on seeing the "no material difference" headline was it meant wherever extracted makes no material difference as it is the consumption which counts. Yeah, right...
However economically, security-wise, and environmentally illogical, this Shank's statement reflects Labour's position. Rather than setting fiscally reasonable conditions and letting the market decide if the geology allows further development in the NS , they prefer to maintain the EPL and stifle development this way. Labour must know that changing the EPL now would benefit the country longer-term but that almost certainly it would not generate more tax revenue before 2030.
Reform and Tories may prefer Labour stick with their current position, as this way the policy difference will be bigger at next election.
Unless something changes, and assuming Miliband allows, Equinor/Rosebank and Shell/Jackdaw (and others, such as EnQuest/B&B) aside from re-applying for consent are unlikely to hasten significant actual new extraction before knowing the successor fiscal conditions. Why would they?
The industry's line with Labour is change the EPL now to encourage investment, for all the reasons listed in Borthwick's excellent response-letter to Shanks, or lose jobs and the supply chain and have the NS go off a cliff edge into irreversible decline.
Labour are sort of hedging their bets; take the maximum tax revenue they can until the next election, and then maybe dangle the carrot of more favourable conditions if they are re-elected. The "oppositions", the industry, the workers/unions, need to make this approach unappealing for Labour - that if they continue with their current approach then whatever changes they later offer will be too late to gain support and harvest votes. What is the best line of attack to pressurise Labour to make changes before 2030, at the least to provide investment allowances (see Sarwar's recent comments) and state what their successor fiscal regime would be if re-elected? I assume as contained in Borthwick's letter. Let's see how Shanks responds. (Could Corbyn's new party announcement be the catalysts that persuades Starmer to stop the mixed messaging and really, through actions, be more supportive of the NS?)
In meantime and until 2023 or changes, the only avenue to increase shareholder value remains via... an accelerated use of tax credits thru deals.