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Thanks, Stevo. Under the current conditions I also can only see companies committing to investing if they get some contractually watertight agreement assuring fiscal stability at the conditions when they agreed to invest. Something as you outlined or as the solutions in this article https://www.engage.hoganlovells.com/knowledgeservices/viewContent.action?key=Ec8teaJ9VaoHO3xXjHTBt17eOOGbnAEFKCLORG72fHz0%2BNbpi2jDfaB8lgiEyY1JAvAvaah9lF3dzoxprWhI6w%3D%3D&nav=FRbANEucS95NMLRN47z%2BeeOgEFCt8EGQ0qFfoEM4UR4%3D&emailtofriendview=true&freeviewlink=true

Assumptions:

1. The government would like a positive decision on Rosebank ASAP, but Equinor (and others for other licences/fields) won’t commit to new UKCS investment without knowing the applicable fiscal conditions and having some agreement of its assured stability over time - something as per the article recently posted by Kokomo.

2. These fiscal conditions can’t be known until the end of the process of the current call for evidence. Offering something in the interim to just Equinor could be challenged under competition law?

3. Therefore, considering 1 and 2, the current fiscal review and its final fit-for-purpose output will be fast-tracked. Legislation before the end of the year?

4. The EPL/ESIM won’t change significantly.

Enquest could then in 2024-28 put in place the infrastructure to exploit B&B, and maybe new licences, and benefit from the EPL’s investment incentives but with production ramped up from the end of the EPL. At same time, have some M&A activity to accelerate the use of the tax credits during 2024-28. Enquest using these credits themselves should create best value. If Enquest can show an acquisition of existing assured production would accelerate the use of the tax credits then against that the banks should be prepared to loan for the acquisition without further calls on shareholders.

All this, plus shareholder return’s announced in 23 and started in 24 shows the route to the… 60p party.

Fantasy or feasible?

When will the concrete output, i.e. a future-proof fit-for-purpose fiscal regime, of this call for evidence be implemented?

Will it be accompanied by something similar to that in the article just posted by Kokomo? Something to protect from future governments half-inching the investments.

The words are going in the right direction, but will this be enough to press the investments button before words maybe become acceptable actions? Seems highly unlikely.

So… I get back to the need for some interim tinkering with the long past its sell-by date EPL/ESIM.

In case not seen, this is the government’s “Call for Evidence” regarding the UK’s Oil and Gas Fiscal Regime. Anyone can respond and the deadline to submit evidence is 11th September 2023.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1175217/CfE_Final_Version_110723__003_.pdf

(If does not open, then copy paste and search for the pdf)

Kokomo et al, agreed, “If oil and gas production collapse, it will be a consequence of Conservative policies agreed in the cabinet office, not protestors”. “…the Conservatives are the true Just Stop Oil party”.

I am trying to think this through but I’m going round in circles. If it is just “posturing” by Sunak to help create a clear energy transition/net-zero/green policy difference with Labour to appeal to a certain segment of the electorate, and he has no intention to modify the fiscal conditions, will this this not backfire when the companies don’t invest? Sunak will look pretty silly if the companies say, thanks but no thanks, go back and try again or we won’t invest. Or is this secondary to the impression he will have created in certain voter’s minds? Apart the companies/associations involved who can call him out on this? Even if Sir Keith accepts oil and gas will be needed way into the future and would accept licences (he hopes) Sunak’s government approves Labour won’t/can’t call Sunak out for just posturing as Labour is calling for a “proper windfall tax”. Could the GMB Union call him out? Or, contrary to what most seem to think, could a modification of the EPL be in the works so policy and fiscal regime fit together?

Where are we at the end of this Energy Week?

In terms of the policy/narrative now adopted by the government, certainly we are in a better place. There is and will be resistance, but their are valid answers to the objections. Sunak and co can’t u-turn now on this policy. Whether Labour’s remains ambiguous or not will be important. Remaining ambiguous leaves them vulnerable to keeping investors scared away and thereby dampening growth and compromising the route to the promised land AKA Net-Zero. The big question is the details and timing for creating a long-term secure fit-for-purpose fiscal regime for the sector. For me this, Labour’s position and changes to the fiscal regime are the two things needed.

This really is such fact-twisting public-triggering BS.

“They also set out their concerns over the cost to the taxpayer, who they say would shoulder more than 90% of the costs of Rosebank's developments.

Former Labour shadow energy secretary Barry Gardiner said: "It is the British public, not Equinor, Shell or Siccar, who pay to develop these oil fields.”

https://www.bbc.com/news/uk-politics-66396048

90% paid by the British taxpayer... Keep the EPL as it is and there is no investment. Take away the investment and there is no 90% or any %. No investment means importing hydrocarbons causing greater carbon emissions.

OK, all here know this, but this sort of misrepresentation of facts and manipulation of the poorly informed should be challenged. I guess that’s…politics.

Actually… maybe Shapps wants to get the message out there that the companies have paid a heavy price (which we have!) in the interests of solidarity to support the population when it was needed, but now is the time to change the tactic to help the companies to still help the population but in a different way.

Need to wait and see how all this plays out.

Comments below from Grant Shapps include mixed messages. Likely a case of trying to please different audiences and, hopefully, get the defense in early for coming fiscal changes. I sure don’t like, and nor will the relevant companies, the use of the word “punitive” - like the companies did something wrong and need to be punished.

“This week I’m meeting with BP and others in Downing Street to talk about £100 billion of investments by oil and gas companies, for example, into renewable energy, hydrogen and carbon capture and storage.

“So they do have to make money in order to be able to invest that money. But I have made sure, we have made sure as a Government, that they have been taxed at a very punitive level.

“And that money has come straight to households and businesses over this last, difficult winter.”

Many of the people opposed to new UK licenses are the same people calling for UK windfall taxes on BP’s and Shell’s profits outside of the UK. It is as if they want to sort of outsource their required production and associated emissions yet collect the associated tax revenue.

As energy/national security is at stake, the media, which is happy to trigger people when propagating this impossibility of fishing from other’s ponds, needs to be more responsible and educate people on how taxation works. Yeah, right…

It also needs to be spelt out that the boot is on the other foot. It is not the UK, or any country, which can pretend to claim tax outside of its jurisdiction, it is the UK, and other countries fortunate enough to have the relevant natural resources, which are competing to attract investment into their country. And when a country’s government has been as fiscally hostile as the UK’s has, to successfully attract investment will require greater and more certain and stable incentives. This should be the message delivered tomorrow at Downing Street.

Below should read: Pinch, punch… More positive new.

Pinch, punch… no More positive news.

“Tomorrow ministers will meet the heads of Shell, BP and other big UK energy players in Downing Street. Government sources said that Grant Shapps, the energy secretary, would ask the companies to look afresh at their North Sea investments in the light of the announcement. Big oil companies have turned their back on the North Sea in the face of more environmental scrutiny and dwindling returns. In May Shell announced that it was selling its 30 per cent stake in the Cambo field — the second-largest undeveloped oil and gas discovery in the North Sea — which is awaiting regulatory approval.

Last month the Treasury announced plans to ease the windfall tax on the profits of oil and gas companies in an attempt to shore up investment. Yesterday it announced a call for evidence to seek the views of the industry on a “long-term fiscal regime” for the North Sea which “delivers certainty, supports investment, protects jobs and the country’s energy security”.“

https://www.thetimes.co.uk/article/b2c9b482-2f6e-11ee-b04c-88a034803f06?shareToken=0a640547c315f4c837fc228193dfe39d

Kraken, yes, that's my thinking too.

Maybe, tho, something quick n durty could be done too, such as only applying the EPL on the income over the historical price average (the calculation method of which also has to be transparent). Doing this would preserve the EPL (and preserve "face") whilst giving the companies some immediate respite , and once the companies are confident in the aims, process and timing to arrive at a long-term tax regime fit-for-purpose and acceptable to a broad group they may be willing to make investment decision sooner (and maybe before this long-term tax regime is finalised).

Kraken, what is needed is as broad a consensus as possible as we don't want something quick n durty now which will be pulled apart either by the next Tory PM or by a Labour PM. We want something which is robust and durable (20 years timeframe...), and that means being accepted as the right way by the largest (or most powerful) group of stakeholders. Maybe this is what the government means by a "call for evidence seeking views on the “evolving context for taxes” on the sector over the long term". The other political parties should be invited to contribute. That the tide has changed is already a good enough positive for now and should be enough for the companies to engage (but not push investment decision buttons). I would see as a next step putting some timing on the process, output and associated action from this "call for evidence seeking views on the “evolving context for taxes” on the sector over the long term". And it should be done and implemented in a 3 to 6 months as until then big investments won't be made.

NewK, and for the EPL to only apply on income over the historical oil price average.

Spin, whilst the statement below is unclear in what it means and any timing involved, I think it is positive and is not to be ignored as it represents the first stage of a change of approach.

However, today ministers launched a call for evidence seeking views on the “evolving context for taxes” on the sector over the long term.

I don’t understand clearly what the final para below means…

I don’t think understanding clearly what the final para below means, but the general message is positive. They understand the EPL is stopping investment and something needs to change to allow their “max-out” and “powering Britain from Britain” desires to materialise.

Daily Telegraph - Government rethinks oil and gas windfall taxes

The Government has signalled that it will rethink its windfall taxes on oil and gas profits as the Prime Minister announces hundreds of North Sea oil contracts.

The Treasury has already committed to keeping the so-called Energy Profits Levy in place until March 2028 as companies saw their earnings surge after Putin’s invasion of Ukraine.

However, today ministers launched a call for evidence seeking views on the “evolving context for taxes” on the sector over the long term.

Still missing the bit which will encourage companies to actually make the investments required to take up the licenses and max-out the NS.

https://www.thetimes.co.uk/article/cfc18ed8-2f24-11ee-bcc5-f14a39d6bb75?shareToken=db4960dbeefc14eb3cb8a2aee5741dfc

“The prime minister will use a trip to Scotland to confirm that the government will issue 100 licences to companies that want to extract oil and gas from the North Sea. The licences will be granted in September.

He will also seek to “max out” production of the North Sea’s remaining reserves by agreeing to further licensing rounds in the future in an attempt to drive up production.”

That’s the hope, romaron, that it’s game changing. Without concrete changes to fiscal policy I cannot see investments to “max-out” the NS forthcoming. The government must know this too. This, energy/national security and a rebalancing of the net-zero objectives versus the cost of living could be the Torys big card gamble to try to stay in Westminster. Let’s reconvene at the end of the week after seeing the policy announcements and the industry’s reaction.