Member Info for Dumbly

It’s the final paragraph, trusting or not Labour with the energy transition, which needs to be pushed. Pragmatism not zealotry is needed. Make it a/the election issue and highlight how Labour would lose votes (unless, that is, the public has been so badly informed and brainwashed). Hit them, Labour, in their vote pockets!

Mansardnan, for sure Miliband demanded the changes to get his acceptance. How active was RR in this decision? Did Starmer not realise the decision does not match what he said in November and will kill investment in the UKCS? He cannot use the excuse the Tories trashed the economy as nothing known now was not known in November. Who is really in control in Labour HQ? Feels like it’s Pat Mac and Miliband.

This from 17 Nov 2023, less than 3 months ago. Starmer is another snake.

https://www.aberdeenlive.news/news/aberdeen-news/sir-keir-starmer-promises-preserve-8915986?int_source=amp_continue_reading&int_medium=amp&int_campaign=continue_reading_button#amp-readmore-target

Sir Keir said: "There was very positive dialogue from the energy sector, absolute clarity, we all want that transition.

"I’m very concerned that we preserve the jobs that we’ve got in oil and gas, which is going to be part of the mix for decades to come – but do more than that, which is ask the question how do we ensure the next generation of jobs are here.”

“Nobody in the sector is saying to me, 'We don’t want the transition’. What they are saying is, ‘We want the transition but here are the challenges, the pinch points, opportunities of the next generation of jobs, are you coming alongside us?

“The answer for me, if we form the next government, is yes. “

Starmer also ruled out extending the windfall tax, which placed a levy on industry profits, after the sunset clause comes into effect on December 3, 2025.

He said: “The windfall tax was only ever a windfall tax – a short-term solution.

“What I want to see is a long-term solution which is that transition when it comes to energy.

“Windfall tax was necessary because of the bills that were going up so fast and the profits that were being made at the time.

The long-term solution is to manage through the transition with a plan – thought through with the sector.”

I partially agree with Stevo. If EnQuest did not have the tax credits now they would be up s-creek. But… they do have them, and if they did not then they would not have made the past losses which generated them and therefore would not be the same company as they are today. Fact is they do have the tax credits, so considering how they would be if they did not have them serves little purpose, although it does… spread doubts.

Disallowing tax credits would effectively mean backdating tax policy, something highly unlikely, challengeable in the courts, and would be a precedent sending a scary message to all investors. It won’t happen.

Agreed, Modestus and romaron.

The view from EnQuest seems to be they prefer the industry bodies to represent them. The Independents’ views get diluted/lost like this. I agree it’s tine the Independents, collectively and individually, put their heads above the parapet. Better to risk to go down screaming and shouting than a whimpering towards a certain demise. Unless better to keep the powder dry as there there is a bigger plan afoot in league with the Tories, something I doubt.

Agreed, romaron, indeed was Sunak himself who introduced it. However, it is not beyond them to turn this round. It was a tax needed at the time, the reason for which has now reduced and been superseded by higher priorities being the cost of living and general prosperity and security of the country. I am confident they can find a way to package and spin it to show Labour’s plans are economically and socially disastrous.

Romaron, Miliband has been allowed to drive this. His eco-Marxism wet-dream risks to create havoc with the UK’s energy sector and greatly reduce the UK’s prosperity including, indeed especially for, the normal working person. He has previous in this regard and needs to be called out. The Conservatives, at the right time, need to make this THE issue of the election.

(Good to see numbers are being attached to decisions, and woukd be good to see the breakdown of that £26b of loss of economic value DW refers to and get it vetted /approved by a respected body)

Rumour is in a fit of pique Red Ed threatened to throw his toys out over dropping the 28B pledge unless he got changes to the Windfall Tax, knowing these checks would effectively stop new investment, making granting licenses largely irrelevant. Actually… i just made that up, but nonetheless is highly plausible.

Maybe better for the Conservatives not to fight these changes, let Labour confirm them in their manifesto and then show the damage they will do to jobs, public purse, security and so on. Would need to get onboard OEUK and the Oil and Gas companies, Unions, OBR, and the Scots. What an alliance that would be!

KO, Re Bressay, Stevo was not referring to the licencing/NTSA approval situation but the IRR should Labour implement what they said yesterday. As you will see from my 19:34 post yesterday I agree with Stevo.

Also, your 21:31 post yesterday implied you understood Labour were proposing a differentiated future fiscal regime for the Majors and the rest - do you stand by this understanding?

Romaron, re your 20:19 post yesterday, agreed it's that oxymoron, legal-theft.

Mansardman, re your 22:38 post, surely Millband could not have posted as per romaron's 20:19 without explicit approval from Starmer.

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The Conservatives would need to spell out how they would adjust the fiscal regime (maybe even make changes soonest) and the different outcomes this would deliver. They need to show the impact their plans w/could have on production, net import of hydrocarbons, and the consequential impact on the treasury. More indigenous hydrocarbons won't directly reduce their price, but it will indirectly due to the improved income for the Treasury. My assumption is more O&G production, and the overall positive impact on GDP and tax revenues, will outweigh the extra WFT Labour's plan would bring in. Then there is all the other stuff; the jobs, skills, realistic pathway for the transition. Finally, it needs to be driven home that the UK and its citizens are super lucky to have the opportunity to have its own hydrocarbons, something most countries would jump at, so why squander this natural luck and instead self-harm? Would Russia or China renounce such an opportunity to gain a competitive advantage? Add in also all the stuff about energy security and war risks.

CAN ALL THIS BE PACKAGED IN A WAY SO VOTER'S CAN ACCEPT IT IS A/THE MASSIVE ISSUE FOR THE ELECTION AND THAT IT IS BETTER THAN LABOUR'S PLANS?

To note, it seems Scotland will likely be key for Labour getting a workable majority. The polling suggests the majority (I saw 70% somewhere) of Scots are in favour of new O&G development. It should not take much to convince them that the Cons plan is better for Scotland.

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Could there be a silver-lining to the position/measure announced by Starmer yesterday?

Labour's position is now clear. Surely, even for Sir Keir, no more U-turns or even swerves are possible. They would extend the Windfall Tax (not calling it an EPL) to 78% and 2030 (probably) and reduce allowances.

(I also heard RR on R4 this morning, she referred to extending the windfall tax on the "big" oil and gas companies - I doubt "big" is meaningful, just rhetoric I think, as when they say "giant", and I cannot see anyway there would be a different fiscal regime based on company size in the UK).

Labour have betrayed the O&G sector - https://www.energyvoice.com/oilandgas/north-sea/547509/labour-windfall-tax-oil-gas/?utm_source=Sailthru&utm_medium=email&utm_campaign=Energy%20Voice%20Daily%20Newsletter%20B%202024-02-09&utm_term=Energy%20Voice%20-%20Newsletter%20%28B%20Test%29 Any thought Labour could listen to the outcome of the Oil and Gas Review Fiscal Regime have gone out the window due to other expedient priorities they think will garner more votes.

Is the silver lining that Labour having now clearly set out their energy transition policy stall allows the Conservatives to do the same and make it a big, if not the biggest, issue for the election?

With Labour, the UK is effectively closed for new O&G investment. There will be some but much less than there could be. The Conservatives need to confirm their energy transition aim is broadly the same as Labour's, but the means and the timing to deliver it differ drastically. The public needs to be asked if it wants a dreamy fairy tale feel-good energy transition narrative which will cause longer-term cause enormous economic damage and increase in household costs, or a realistic energy transition plan, albeit less palatable, but one which will deliver a far better long-term economic and security outcome for the country and its people.

More nationalisation without compensation. What Johnson and Sunak started, Starmer will finish. Bet they did not get caught holding O&G shares. The assumption has to be 78% tax, or worse, will be permanent. For PI’s there would also be personal tax on any dividends/capital gains. Game over for PIs. Profitable UK production for sale probably just got cheaper or, put differently, the value of tax credits just increased. Maybe the company could salvage something on that front. Bressay happening just became more unlikely, as EP setting sail just became more likely. Who will risk investing in E&P in the the UKCS when the potential reward is so slim? Time to accept to shut the E&P shop in the UK. Have to hope that discovery of gas in Indonesia really is very big and EnQuest’s participation significant.

The BBC website is reporting: "The party [Labour] will extend its Windfall tax until the end of the next parliament, which they say will raise £10.8bn. Currently the plan to increase the overall tax rate on oil and gas producers from 75% to 78% ends in December 2025".

The Windfall Tax is not "its" i.e. Labour's, as the Conservatives introduced it, the current rate is 75% not 78%, and it's currently set to end not in 2025 but 2028. Labour, if elected, would now extend it to "the end of the next parliament". Whatever the details, and however one looks at it, this is not good news (unless, I suppose, the "next parliament" is short-lived).

Romaron, indeed it is sober reading. I thought of you as I read the section:

"The claim that wind energy is ‘nine times cheaper’ than gas, as made by website Carbon Brief in August 2022, never was true – the analysis behind it was economically inappropriate and mathematically flawed to boot. For one thing it compared the long-term, guaranteed prices paid to operators of wind and solar farms with the ‘day ahead’ prices, which have to be paid to owners of gas plants to switch them on for a few hours to make up for a lack of wind and solar power. But now the ‘wind nine times cheaper’ claim is looking even more of a fantasy."

"Is the popular energy transition narrative valid or is it imaginary?"

https://www.artberman.com/blog/betting-the-world-on-an-imaginary-energy-future/

Clearly it is imaginary, and slowly this is is being understood. Today's move away from the "28B" pledge is another small step towards accepting this.

“…however saleable a promise of running down the North Sea might have been a couple of years ago, it is a lot less so now with large parts of the oil and gas-producing world in turmoil. There may be a rational argument against making that connection but try selling it on an Aberdeen doorstep! In fact, don’t bother.”

https://www.energyvoice.com/opinion/546780/oil-and-the-general-election-the-banners-vs-the-mandaters/

Kraken, good info, thanks.

As Stevo has pointed out, for companies with tax losses the EPL investment allowance is not as beneficial as for companies without tax losses. EnQuest would benefit best at first to find a way to accelerate the use of the tax losses. They could do this by buying profitable production. Another way would be if past tax losses were allowed against EPL liabilities (chance of this happening?). At current fiscal regime, the very best would probably be a co-ordinated use of the tax losses and new investment once the tax losses are used up and the EPL is still in place. Could find a way to use the $1.3B or so of tax credits in, say, 3 years, and before the EPL is scheduled to end in 2028? Seems unlikely.

One hope AB is using all his power and connections to pressurise the Conservatives to understand the damage the EPL/WFT has done and the related risks for the UK's energy security. What has he to lose?

I see all the hyperbole about a war with Russia and therefore the need for more troops and equipment - what about the energy to power the equipment?

Something has to be done in the Spring Budget - at least allow past losses/credits to be used against the EPL/WFT.

(I realise writing this is just a release of frustration, but one really hopes AB is shouting as loud as he can to do something with the EPL/WTF)

Kracken, it would be good to also have something else to accelerate the use of the tax credits, if necessary as a priority over new field development as it would be better tax-wise, and some detail about EnQuest’s participation in the “big gas discovery [in Indonesia]” including an indication of its value to the company.