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Came across as simplistic and lazy journalism padded out with nice scenery and talking heads. The conclusion that supply is there because the demand is there should have been the starting point. The deeper more demanding journalism would have been to u

explore why this is the case and what could be done to either reduce this and/or ameliorate the effect. What are the issues, the possible trade-off choices. Telling the hard truths were avoided.

Https://www.bbc.co.uk/programmes/m001sgcn

Let’s see what they say, but could it maybe be something to do with demand and the realisation that renewables, unless subsidised to the hilt and at the expense of people’s standard of living, won’t cut the mustard with regards to achieving the unreasonable Energy Transition/Net Zero targets?

“ Almost every country in the world has made a commitment to limit the rise in global warming to 1.5 degrees. The experts say that will only happen if we stop searching for new fossil fuels. So why is oil, coal and gas exploration still booming? As world leaders prepare for a landmark climate conference in Dubai, reporter Richard Bilton investigates why we are still looking for buried carbon in almost every part of the globe.”

And, Frac, this is an area you know something about and so you can… just imagine what its like in areas you/we don’t know so much about. i.e. the same. We’re doomed!

Happy Monday :) :) :)

Unsurprisingly, it's happening in the US, Germany, all over: https://www.zerohedge.com/commodities/german-govt-agrees-provisional-siemens-energy-guarantees-amid-wind-crisis?ref=biztoc.com

Thanks for your thoughts, romaron. We’re on the same page. My hope (that word again…) is the reconciliation you view as inevitable could happen sooner rather than later. Is it worth Labour strongly opposing on this matter? They are so far ahead anyway. They will want soonest growth, jobs, improved balance of payments, tax revenue. Passively accepting the Tory’s plans gives them a sort of get-out too from their current no new licenses position. Especially if the Review is viewed as reasonable by independent bodies. Realistically, tho, it is more likely the whole thing becomes politicised, but the… hope remains. Anyway, first step is to see next month the output from the Review.

Https://www.energyvoice.com/oilandgas/north-sea/exploration-production/541113/equinor-uk-chief-warns-uk-continental-shelf-investment-at-all-time-low/

An extract:

Equinor senior vice president for UK and Ireland Arne Gürtner met with both Scottish First Minister Humza Yousaf and UK energy secretary Claire Coutinho this week to discuss the Norwegian state-owned firm’s operations in the country.

Mr Gürtner said simply issuing more North Sea exploration licences was not enough to support the UK oil and gas sector.

“In both meetings I was candid on the fact that the [UK continental shelf] is on a sharp decline and investments into the basin on an all-time low, while, although certainly welcomed, exploration licensing alone will not change that picture,” Mr Gürtner wrote on social media.

“Hence, I also asked for focus on political and fiscal stability to ensure domestic energy production and security.”

Thanks, Stevo, your explanation of how the tax/EPL situation works with regards to capex and allowances, and how it motivates differently according to a company’s tax credits position was helpful. I continue to think the biggest issue for the Independents is knowing the long-term fiscal regime. The risk is a company while EPL is in force makes capex to receive a tax allowance to expand production, much of which could come after 2028, only to find out the EPL is extended or something similar replaces it. This would mean and they would have been “suckered in” for a much longer period. This is even more risky for the Independents with their RBL constraints and associated hedging obligations, while big companies could more easily ride the situation out. This risk of getting “suckered in” is why I put a lot of emphasis (and…hope) on the Review of the Oil and Gas Fiscal Regime currently underway. (Delivering a “fair” Review report is the minimum the Tories can do for the way they have taken from shareholders under false pretences.) It is in all stakeholders interests, including both main political parties, that a fiscal regime per the Review’s Terms of Reference is put in place. (https://www.gov.uk/government/publications/review-of-the-oil-and-gas-fiscal-regime-terms-of-reference/review-of-the-oil-and-gas-fiscal-regime-terms-of-reference) The Review is scheduled to report by the end of this year. Hopefully that means with detailed “costed” recommendations, so something ready for legislation/implementation. The proposed legislation in the King’s Speech for annual licencing rounds if the 2 tests are met of the UK requiring more gas than it can produce, and UK production generating less emissions than imported LPG, would complement and support the hopefully “fair” recommendations of the Review and per its ToR. To remind, the Treasury on the Review are working closely with HMRC and the NSTA. Labour could oppose/reject all of this, but would it really be in their interests? They know more O&G will be needed than the UK can produce, and they also want investment and growth and jobs and tax revenue. It’s not like investing in O&G would rob money for renewables investment.

Thoughts, anyone?

Shares or pounds?

The late-life asset operating model looks similar and regarding Apache's full-year 2022 results I have seen their North Sea operations described as a continuing cash-cow, a situation which if current could fit nicely with tax losses/credits.

Apache just announced likely another 90 redundancies in its UK based workforce of 600 due to… the Windfall tax/EPL. Speculation they may want to exit the UK altogether. A good fit with Enquest?

The “children” must be really confused and angry as they are not getting what they want. And immediately! Yep, at this point the more they do the more they will help those they oppose.

Maybe they do need a little Indian holiday. They could always offset their carbon footprints by lecturing the locals on the evils of hydrocarbons. Hydrocarbons which allowed these missionary-like zealots to be who they are and get where whey want.

Oh yes they can :) :) :)

My guess is they will say their fiscal policy for O&G will be something close to the outcome of the relevant fiscal review, and that together with their licensing policy the 2 policies will generate more tax revenue than Labour’s no new licensing policy. Before doing this they will want to get buy in, as far as possible, from all key independent bodies. I am thinking HMRC, NSTA, OBR, maybe even CCC. They will ensure to get the fiscal review finalised will take until… a few months before the next GE. If the licensing and fiscal policies both support Net-Zero targets, in so much would mean less emissions than importing LPG, and delivers more tax revenue than leaving things as they are now, plus has the OK from the above bodies, then would be tough for Labour to oppose. But probably they would as otherwise it would conflict with their stance of no new licences under a Labour government.

As said, I want to be wrong and that instead they do something sooner to improve the fiscal environment for O&G. But… even if they did would companies invest without knowing who will head the next government and their relevant fiscal policy?

Tommo, as I’ve posted before I expect Sunak to make the policy decisions, as for example expected in tomo’s King’s Speech, and prepare the territory i.e. with the Oil and Gas fiscal review with its Call for Evidence which closed early September and with next steps expected to be communicated by the end of the year, but not actually take actions to improve the UKCS investment environment. The vote-catching value for him, at this stage, is more in the positioning and creating a clear divide between him and Labour. You’re right, of course, that fiscal changes are needed for many of the new licences to actually be developed, but It’s too late in this government for any real economic benefits to accrue before the next GE, and why would he do the “dirty” work for Starmer and gift him the economic benefits about which he, Starmer, has already possibly gained the political advantages by… opposing the relevant policies? Removing the EPL now would give Labour more and better ammo to easily whip up the public than the announcement of the new licences legislation. I’d like to be wrong, and maybe there is a sort of intermediate lower-profile step, as I think Oxy and Kraken have suggested, by making more costs deductible against the EPL, or maybe even making tax losses EPL deductible, or in the ESIM separating the requirement for both oil and gas prices to be below their separate threshold for 2 quarters for the EPL to be suspended. Any or all of these measure would benefit most the UK focussed independents, the ones with most need and most needed. Even considering the content of tomorrow’s KS I still think it unlikely Jeremy throws us a bone the Autumn Statement.

BS before on the cost of wind powered electricity generation (9Xs cheaper than gas…) from the inept doc fond of data cherry-picking, and more BS now about electricity storage.

“Simon Evans of Carbon Brief is known as the man behind the ludicrous claim that wind power is nine times cheaper than gas, a farrago of disinformation that is debunked in short order here. (Short version – he took gas-fired prices at the top of the market, messed up by taking them in Euros rather than in sterling, and then compared to preposterous figures for wind costs).

Today Dr Evans has declared that Michael Kelly has got it all wrong on electricity storage in an article in the Telegraph today. Unfortunately, this set of arguments is no less ludicrous than the last.”

https://www.netzerowatch.com/why-dr-evans-is-wrong/

I have re-read this article posted on 30/10 by romaron https://thecritic.co.uk/issues/november-2023/britain-a-goner-with-the-wind/ and, assuming it is accurate, the wind farm electricity producers believe they have the government/country... over a barrel (and not of oil). They believe they cannot lose. They only built thanks to subsidies and now want more taxpayer money than agreed or they won't build the capacity needed to reach the government’s legally obligated targets. It is a situation of moral hazard. And if they do build more it is going to make the nation poorer. Is OUR gamble that THEIR intermittency issue will be solved by some as yet unknown electricity storage technology solution?

On a related-point, at least to my mind, I read regarding this week's King's Speech:

"As he [Rishi Sunak] prepares to unveil what is on course to be his last programme for government as prime minister, Mr Sunak said the speech would stimulate the economy and strengthen society, and suggested its legacy would last seven decades."

"Also expected in the speech are moves to safeguard the UK's energy independence, in the wake of the Russian invasion of Ukraine."

It will be interesting to see what in the speech could have a 7 decades impact and, of course, the moves to safeguard the UK's energy independence.

Back to the article:

"Britain’s economic future is being sacrificed on the altar of Net Zero."

"The “Renewable Grid” is a political indulgence that can never provide the reliable, dispatchable power the grid requires."

"Whereas the “Renewable Grid” is a political indulgence, achieving Net Zero is truly only for those who either still believe in fairies and unicorns or want to embrace pre-industrial standards of living."

"No one ever asked Britain’s electorate if they wanted to live in a country which wasn’t bankrupt but might be 2 degrees warmer." (I'd maybe drop the 2 degrees warmer bit).

If Sunak and co could package the content of the article into an easy to understand message for the voters to understand together with a set of corrective policies he could be onto a winner. Repeal/modify the Net Zero legislation? Halt wind generation expansion (at least for now and until an intermittency solution is available)? Policies to stimulate and incentivise an increase in hydrocarbon production from the UKCS. More Nuclear.

Sunak might as well be bold and just maybe pull of a surprise GE result than be a timid In-Action Man and almost certainly lose. It promises to be an interesting week.

Hunt's Twitter/X post today was:

In the UK we’re backing clean energy like nuclear, with an investment in Sizewell C worth over £1bn & support for the development of Hinkley Point C.

Chancellor

@Jeremy_Hunt

met French Minister

@BrunoLeMaire

today where they discussed how to improve energy security.

Hi romaron - as said, I see the content of the talks between Hunt and Equinor as showing Hunt is positive towards further drilling/production in the NS. This is confirmed in the first para below. What am I missing that makes you conclude the opposite? I understand the second para means no upward changes to the current tax rates, with the EPL not being considered here as it is a... levy not a tax. I said before I was not sure about his views on fiscal policy as may be does include the EPL in his definition of tax..

"The new documents, from a private meeting held between Chancellor Jeremy Hunt and Equinor chief executive Anders Opedal on January 26, shows Hunt offering to work with Equinor to publicly promote the oil and gas industry: “[The chancellor] asked him to work with us [The Treasury] and BEIS on the messaging around their investment in the North Sea – to build public support for oil and gas.”

“[The chancellor] basically said he was committed to not changing the tax on oil and gas (barring nuclear war) – and he valued the north sea and its role in the transition. That as well as net zero, we needed energy security and he was happy to say publicly that he supported the Rosebank investment.”

Worth a read, shows Hunty seems to be positive towards the NS, although I’m not sure what conclusions to reach with regards to his view on fiscal policy/EPL.

https://www.desmog.com/2023/10/27/chancellor-jeremy-hunt-told-equinor-to-work-with-us-on-oil-and-gas-messaging/

Nobull, and let me first say this is not meant to be an attack on AB, but I share concerns about him being too connected with and attached to the company. The company is very much his baby and his position/status/image/power is very much because of the company. Would Bloomberg interview him in Davos if he was not the CEO of Enquest? Would his role at his foundation provide similar status etc? I doubt it. His style seems to be open and to seek opinions of others but I imagine he’s very much in near total control of the company and people have to fall in-line with him. There must be situations where his personal motives and objectives are not completely aligned with best extracting shareholder value. Not much to do about this and there are upsides too with this situation.

On a separate point, Hunty yesterday posted on Twitter/X: “The Autumn Statement will set out how we will boost economic growth by unlocking private investment, getting more Brits back to work, and delivering a more productive British state.” Unlocking private investment in the UKCS would have a multiplier positive effect . Will he touch the EPL. My guess is… no.

The EPL delivers again. More investment, more skilled jobs, more tax revenue, greater emissions - all outside of the

UK. Good work Sunky n Hunty.

https://www.thetimes.co.uk/article/43e8d78e-78f0-11ee-86e8-a42a2179af55?shareToken=f3ad9bb6a7049a90bcea5f39f702079f