Member Info for Modestus1

Https://www.spectator.co.uk/article/ed-miliband-is-talking-nonsense-about-energy-prices-again/

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of the view that the industries of the North Sea are too big to fail. Neither man is a climate denier. They know North Sea oil and gas is in decline. They agree that a transition to renewables is coming. But they are among those who believe the transition is coming too hard and fast to sustain the jobs on which so much of Scotland — and, indeed, the northeast of England — depend. Smith has taken to asking Downing Street exactly how it intends to cut energy bills.

Together with Sharon Graham, the general secretary of Unite, all three have told ministers at the very top that it is time for a rethink on oil and gas licensing, in the name of growth and the survival of the Scottish Labour Party.

If the North Sea is to become the powerhouse of renewables, their view is that energy firms should be allowed to make that change from a position of strength. And so there are tentative conversations in government — let’s put it no more strongly than that — about whether it is time to think the unthinkable and reconsider.

It may come to nothing. Those conversations could well come to an end very quickly, and government policy says they should. However, it’s not just Reform who want to change it.

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Reform’s clarion call for reindustrialisation is worrying Labour strategists. So much so that, as I listened to Farage claim the credit for the rescue of British Steel on Tuesday, I was imagining what some of them might say — not about Nigel, but themselves. Some would say that, on one level, Farage is right. The world has changed and Labour must change with it. Perhaps, they may venture in private moments, we put ourselves on the wrong side of history when we placed clean power at the centre of our industrial and economic strategy.

So much of what Labour said and did in opposition was a study in deliberate ambiguity but that was never the case on energy. In government, too, they have stopped issuing new oil and gas licences and buried plans for a new deep coal mine in Cumbria. The sums of money to be invested by the state in green schemes might be smaller, nowhere near the £28 billion a year promised by Rachel Reeves in 2021, but the letter of the policy remains the same. It is not difficult to find someone in Downing Street or Whitehall who will tell you this might be a mistake.

Nobody, though, is daring to say so in public. And as I sat in the Newton Aycliffe working men’s club I said as much to a person close to and trusted by the prime minister. Farage’s industrial revolution is going to inspire the same sort of reaction we are used to, I said, but the months will come and go and nothing will have changed. It’s not as if anyone in government is going to come out and say that, actually, the world really has changed and it’s time to license new oil and gas drilling, is it? Well, they said. About that …

I don’t want to overstate the facts. Government policy on oil and gas is, at the time of writing, the same as it ever was. Ed Miliband, the energy secretary, pursues his own agenda — that investment in clean power, the fastest-growing sector of the economy, is the way to reindustrialise Britain and make its working people wealthy again — with the same clarity and consistency as Farage.

Miliband has the support of the prime minister and has weathered countless attempts to emasculate him with superhuman resilience. He is the minister who decides these things and we know the decisions he will take. But that is not dissuading a coalition of the unwilling from banging on the back doors of No 10 and the Treasury in the hope that others might decide the opposite, and conclude that the time has come to reverse the government’s opposition to new oil and gas licences.

As so often with the Labour Party, the discussion starts in Scotland. That is where the oil and gas fields in question are, and where the industry and political figures who are pushing for a U-turn believe the political price for inaction will be steepest.

Gary Smith, the general secretary of the GMB union — who wants tax cuts for the oil and gas companies that employ so many of his members — and Gordon Brown, the former prime minister, are both

After the rescue of British Steel, influential Labour Party figures are now pressing for an urgent rethink on oil and gas drilling

https://www.thetimes.com/comment/columnists/article/north-sea-is-battleground-for-labour-v-reform-d5rnh3x97

Earlier this week I sat at the back of the hall of a working men’s club in County Durham and listened to Nigel Farage build a time machine out of rhetoric we might expect from the pinstriped menace of British politics.

You and I know as well as they do in Downing Street that Reform UK’s appeal to what were once known as Labour’s heartlands — leased temporarily to Boris Johnson in 2019 — has much to do with immigration. But listening to its leader this week, it is clear that something profound is changing in how the radical right does its politics in post-industrial Britain.

In 1984 a 90-year-old Harold Macmillan, unsteady on his feet, used his maiden speech in the House of Lords to attack Margaret Thatcher’s disrespect for “the greatest men in the world” — the striking pitmen whose deadly toil had sustained the country through two world wars. Now it is Farage, an unlikely saviour for the industries that were the crucible of the Labour Party and its governments, who tells them that heavy industry might make them great again.

Farage and Reform are electrifying the politics of the deep north, the East Midlands, the Welsh valleys and even Scotland ahead of the local and devolved elections this May and next. What, though, is keeping the lights on? Now, as it was decades and centuries ago, the answer is fossil fuels: coal, oil, natural gas. Carbon once made Britain rich and Reform insist it must do so again, once its new English Reformation is complete and the orthodoxies of net zero are dissolved like the monasteries.

Both diagnosis and prescription are as blunt as can be, perfectly expressed by Lee Anderson, the Ashfield MP who went underground to mine the north Nottinghamshire coalfield as a teenager, weeks after the miners’ strike, declaring now that the time has come to reopen the pits and “dig, baby, dig”. In its clarity and audacity it is breathtaking stuff. Will it suck the life out of Sir Keir Starmer’s own answers to a volatile world in which energy itself is now a weapon of war?

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Britain also exports much of its crude overseas and then imports refined products because of its limited refining capacity.

Almost all UK volume comes from the North Sea oil and gas basin. Production here reached 1.09 million barrels per day last year, but is forecast to drop sharply by the end of the decade to 620,000 bpd, according to the North Sea Transition Authority. That’s a fraction of the basin's peak output of around 4 million bpd in 1999.

The sizeable decline is a result of the natural depletion of existing reserves and the reduction in investments in the basin in recent years. The latter trend accelerated after the government imposed a windfall tax on producers in the wake of the 2022 energy crisis that brought total tax on the sector to 78%, among the highest in the world.

The UK’s Labour government is now in the midst of a consultation process over its commitments to halt new oil and gas licences in the North Sea as part of its climate strategy.

Limiting domestic production would seemingly be counterproductive. It would make Britain more reliant on imports of oil and liquefied natural gas, potentially leading to higher energy bills, something politicians do not want. This process would release significantly more carbon than domestic production, given transport-related emissions.

Moreover, forgoing energy security would make all other efforts to protect critical supply chains – including the potential British Steel nationalisation – largely moot.

Extending North Sea production, therefore, makes sense, as tapping the area’s existing resources and supporting future discoveries could slow down the basin's decline and reduce the country’s need for imports.

Britain is on track to consume 13 to 15 billion barrels of oil and gas equivalent over the next 25 years, according to industry body Offshore Energy UK, and the country is currently set to produce 4 billion boe domestically.

The North Sea contains an additional 2 to 3 billion boe from new and existing fields that could prop up production, according to OEUK.

Of course, discovering new resources is not the same as developing them, which will depend on the price outlook and potential returns on investment. The government would be wise to develop long-term plans for maintaining energy security after the basin runs dry.

But squeezing the last remaining barrels from the North Sea appears necessary in a new era where national security is increasingly contingent on energy and industrial independence.

And if the government wants to draw one lesson from the British Steel drama, it should be that it’s better to support critical domestic industries before they become largely irrelevant.

Https://www.reuters.com/markets/commodities/british-steel-seizure-makes-north-sea-extension-no-brainer-bousso-2025-04-15/

LONDON, April 15 - The UK government's seizure of British Steel from Chinese company Jingye on national security grounds suggests extending North Sea oil and gas production is now a no-brainer.

The deteriorating global economic outlook resulting from U.S. President Donald Trump’s tariff war has led many European governments to reconsider their industrial policies and energy transition ambitions, amplifying a debate that started with the 2022 energy price shock.

Central to this new thinking is the need to secure supply chains by supporting strategic domestic industries.

The likely nationalisation of British Steel following an emergency vote by the UK parliament on Saturday is a case in point. And the episode might make the government rethink plans to reduce domestic production in an even more strategically important sector: oil and gas.

The government's radical action, opens new tab following months of failed negotiations with British Steel owner Jingye prevents the company from shutting down the country's two last blast furnaces.

The rationale for wanting to keep them open is simple. British Steel supplies vital materials used for the railway and construction sector, and the government considers the steel industry central to its economic and energy transition strategies. National pride also doubtless played a role, given that Britain is the birthplace of the Industrial Revolution.

But hardnosed economic realities suggest that the country's steel industry may already be a lost cause.

The struggling steel sector is minuscule, contributing only 1.7 billion pounds ($2 billion) to the economy in 2024, or 0.1% of the country's total economic activity, according to government data. Its annual production represented a mere 0.3% of the worldwide total. Additionally, the sector faces stiff competition not only from China but also from Europe, where production power costs, are significantly cheaper.

So nationalisation now appears to be too little, too late.

If the UK government is worried about over-reliance on foreign steel, then it should certainly be concerned about reliance on foreign oil and gas.

These fossil fuels meet around 74% of Britain's energy demand and are likely to continue fuelling the economy for decades, even under the most aggressive renewables growth projections.

And unlike steel, Britain's domestic energy sector is not a lost cause. It produced half of the country's gas demand of 687,120 gigawatt hour in 2024, according to government data, and indirectly met around 60% of total daily oil consumption.

Hi Romaron, article about the felled Enfield oak tree you mentioned : https://www.telegraph.co.uk/news/2025/04/15/toby-carvery-admits-chopping-down-400-year-old-oak-tree/

“The whole saga is a reminder that so-called ‘transformational’ acquisitions more often destroy than create value as Wood Group’s problems can largely be traced back to its combination with Amec Foster Wheeler in 2017.”

Https://www.bloomberg.com/news/articles/2025-04-13/trump-s-energy-secretary-says-average-oil-prices-will-be-lower

Energy prices are set to be lower under the current US administration than in the prior one, according to US Energy Secretary Chris Wright.

“Under President Trump’s leadership in the next four years we’ll almost certainly see lower average energy prices than we saw in the last four years of the previous administration,” Wright said at a briefing with reporters in Riyadh. He declined to comment on specific price targets.

The US under Biden frequently clashed with Saudi Arabia over energy policy after the US felt its entreaties to boost production and lower prices to deal with inflation were ignored. Crude averaged about $83 a barrel between 2017 and 2021, according to data compiled by Bloomberg.

“I can’t comment about where oil prices are today or where they’re going, but if you reduce barriers to investment, reduce barriers to build infrastructure, you can lower the supply costs of energy,” Wright said.

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He explained that the firms will also see “cost consolidation” as another major driver for the deal.

It is worth noting that Wisely sees the “hundreds of millions in tax” as a more general comment about how UK operators could stand to benefit from current merger and acquisition trends.

Businesses that have made losses on assets or invested in decommissioning stand to receive tax relief, which “are beneficial to the other party” in a tie-up, the CMS partner explained.

He added the “tax synergy” included deploying historic losses against profits.

“Presumably one of the companies was making money and needed to sort of shelter the losses.”

The Spanish energy giant also stands to gain from holding less than 50% of the new UK entity as it will not be required to report emissions from the country.

The Norwegian private equity-backed Neo Energy has slammed the breaks on its Buchan development due to the UK’s political and fiscal climate, however, Neo Next may be unlocking further investment.

When asked about Buchan, Wisely said: “I think the only thing I probably could say is that, from my understanding, this is going to be a company that actually does quite a lot in the UK.

“So, it’s not just going to sit there with existing production and things like that.

“I think there’ll be further mergers, acquisitions, field developments and things like that.”

As a result, people are “excited” to be involved in the upcoming Neo Next, Wisely he added.

The combination follows a trend in the North Sea of operators combining assets to shelter from high tax bills and reduce risk of further UK investment.

‘Hundreds of millions in tax’ to be saved due to Neo and Repsol-style deals

https://www.energyvoice.com/oilandgas/570926/neo-and-repsol-to-save-millions-in-tax-following-merger/

Tax savings worth hundreds of millions for North Sea oil and gas companies are a key driver of deals like Repsol and Neo Energy, alongside delivering the benefits of more scale and diversity and opportunities for cost consolidation.

CMS partner Norman Wisely, who worked on the tie-up between Repsol and Neo, said that North Sea firms could save “hundreds of millions in tax” as a result of mergers.

The two businesses will combine their North Sea oil and gas producing assets, with Neo claiming 55% ownership of the new Neo Next Energy, while Repsol takes ownership of the remaining 45% stake.

As the Spanish energy giant retains $1.8 billion in decommissioning liability, the Aberdeen-based operator stands to gain, Wisely explained.

Meanwhile, the Madrid-headquartered company will no longer have to report carbon emissions from the North Sea in the same way, due to having relinquished its status as an operator to that of a minority shareholder in the firm, which is expected to have a combined production of more than 130,000 boe/d this year.

Wisely explained, the structure of the deal means the new entity will be able to take advantage of tax relief on the costs associated with decommissioning ageing North Sea rigs and infrastructure.

Repsol is thought to have one of the largest decommissioning liability portfolios in the North Sea, including the Fulmar, Saltire and Tartan platforms.

The combined group will target “synergies” from the combination worth over $1 billion, a law firm acting for Repsol has said.

Slaughter and May, which acted for Repsol‘s E&P division that will own the stake in the new North Sea business, said the Spanish firm will commit to spend up to $1.8bn, which represents around 40% of the decommissioning liabilities.

“Repsol will retain $1.8bn of decom liability. So that is a debt effectively that is being paid into the company [Neo Next],” Wisely told Energy Voice.

He added it is the joint venture Neo Next “that would be actually spending the cash and therefore it would be the entity that’s entitled to tax relief off the back of that”.

The $1.8bn being stumped up by Repsol for decommissioning does not cover all of the firm’s ageing North Sea assets. Following the combination, both firms will spread the cost based on their ownership stake.

Wisely added that there are “a lot of tax synergies between the two companies” which made the deal appealing.

“I think they reckon that it’s going to save them around, potentially, hundreds of millions in tax by combining the two entities.

“So, that’s one of the main drivers for the deal.”

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in the year before, as oil prices have fallen. By 2029/30, the OBR forecasts tax revenues will have dropped to £2.3bn because of dwindling North Sea resources.

Gail Anderson, research director at energy consultancy Wood Mackenzie, said she expected more M&A activity in the North Sea in the months ahead. “There are still big risks in the industry and companies are trying to think about how they mitigate those risks,” she said. “I think its probably more likely than not that we will see more deals before the year is out.”

North Sea oil deals allow companies to offset billions in tax liabilities

In three recent arrangements, operators with significant tax losses have merged with rivals with profitable assets

https://www.ft.com/content/48d7ca6f-aed7-4245-8b28-249c0d68d032

North Sea oil and gas companies have agreed a series of mergers that will allow them to offset billions of pounds of tax liabilities against future profits.

In three deals in the past six months, companies with significant tax losses have merged with rivals with profitable assets.

Ithaca, which had $4.5bn of tax losses at the end of 2023, merged its assets with Italian company Eni in October. Equinor, which was carrying approximately $7.6bn of tax losses in the North Sea, is merging its portfolio with Shell UK, and last month, Neo, which reported a tax loss position of $3.7bn at the end of 2022, announced a merger with Repsol’s North Sea business.

While the deals were driven by strategic reasons including building larger and more flexible companies in a declining oil and gas basin, a number of investment bankers, lawyers and accountants cited the potential for lower taxes as a significant attraction.

“If you are Group A and you have lots of tax losses and some oilfields at the end of their life and not making much money and Group B has lots of oil coming online, by moving the assets around, and subject to various anti-avoidance rules, you can offset Group A’s losses against Group B’s profits,” said a senior North Sea tax adviser at a big four accounting firm.

“There are tried and tested mechanisms and most people understand how the rules work,” they added.

The oil industry has complained repeatedly about high and volatile taxes on North Sea production. Companies currently face a headline tax rate on their profits of 78 per cent, made up of corporation tax, supplementary tax and the Energy Profits Levy, a windfall tax brought in after the sharp rise in energy prices at the start of the Ukraine war.

Although the price of oil has slumped to a four-year low of under $60 a barrel, producers in the North Sea are still liable for the EPL because gas prices remain well above the 59p-a-therm threshold for the current tax year.

“I have clients who feel more secure in the tax regime of sub-Saharan Africa than they do in the UK, which is frankly astonishing,” said Nick Davis, an energy partner at law firm Haynes Boone. “These [deals] give scale, which possibly guards against it, but I don’t think you can get any comfort on the tax regime.”

He added that merger activity may also be increasing because many companies feel they are at the bottom of the market — the current government has banned new exploration licenses — and that the outlook for North Sea production can only improve.

Tax revenues from the North Sea are in decline. Last month, the UK’s Office for Budget Responsibility forecast a 22 per cent drop in tax receipts for the 2024/25 year, compared with £5bn in

Of national importance the oil sector 's indeed, but i 'd prefer ENQ not to be nationalised :-)

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at $65 everyone is back drilling more.

Assume that the worst comes, and oil prices fall to $50, the unofficial target of the White House. Under that scenario, total petroleum production in America will probably decline by 1 million barrels a day by the end of 2025 or early 2026.

To complete the exercise, assume that domestic oil demand also falls a bit as the economy cools. Still, back of the envelope math suggests the US would probably need to import an additional 750,000 barrels a day to cover the shortfall between domestic demand and local production. Even at $50 a barrel, that adds nearly $14 billion to the trade account. It's about the size of the American trade deficit with France, with all its wines, champagne, and foie gras. Reduce oil output further; increase imports more, and soon the numbers are quite material.

Trump is wishing for an oil crash. In the process, he will destroy what has been the most efficient tool to reduce the US trade deficit over the last 20 years. That seems ill-conceived. But then, almost all White House trade policy is.

Shale producers reversed the US oil deficit. Now they face ruin at $50-a-barrel.

https://www.bloomberg.com/opinion/articles/2025-04-11/oil-slump-risks-breaking-best-us-deficit-tool?srnd=homepage-europe

Here's an economic truth that fossil fuel detractors rarely talk about: The US oil industry has done more to reduce its country’s trade deficit than any other.

Thanks to geological luck, engineering prowess, and shrewd capitalism, the shale revolution turned what two decades ago was a nearly $400 billion-a-year oil trade deficit into a $45 billion surplus in 2024. Now, President Donald Trump, in theory the champion of “drill, baby, drill,” risks killing it.

The White House is pushing oil prices toward $50 a barrel, and perhaps even lower if you believe – difficult as it is – what US trade czar Peter Navarro says. As oil prices plunged 17% in a week, US Treasury Secretary Scott Bessent was on television cheerleading the crash. Part of the decline is the collateral damage from the tariff drama of recent days, but the White House’s fingerprints are all over the other part: diplomatic pressure on OPEC+ to increase output.

The Trump administration seems to be motivated by a desperate attempt to cushion the inflationary impact of the trade war with cheap oil. Yet, $50-a-barrel will have another macroeconomic consequence: widening the trade deficit that Trump wants to reduce. Drill, baby, drill doesn’t work at $50-a-barrel – and if the US doesn’t drill, it must import.

On Wednesday, West Texas Intermediate touched a four-year low of $55.12 a barrel, only to recover to around $60 a barrel after Trump made a U-turn in the trade war. Still, a lot of the damage is done.

To understand what’s at stake, it helps to go back to 2008, during the second term of George W. Bush. The US trade deficit was running then at about $800 billion a year. Nearly half of that - $386 billion, to be precise – corresponded to the imbalance in petroleum trade.

Then came the shale revolution. The 11 million barrels a day of net oil imports during the late Bush presidency turned into net exports of more than 2 million barrels a day by the time Joe Biden left the White House. The oil export boom reduced the overall trade deficit, created thousands of blue-collar jobs in Texas, North Dakota and other typically deprived areas of America and supported manufacturers. It helped that the OPEC cartel cut production to keep prices high, in effect subsidizing shale.

Here’s the problem: shale isn’t cheap. On average, producers say they can’t drill profitably below $65 per barrel versus a threshold of $49 in 2020, according to the Federal Reserve Bank of Dallas. Importantly, with shale, small price changes matter a lot: the difference between booming production and falling output is measured in a handful of dollars. At $50, many are staring at financial calamity; $55 is a trough but can be survived; $60 isn’t great, but money still flows; at $65 everyone

China hit back at Donald Trump’s latest escalation of his trade war by announcing it will slap the US with 125pc tariffs.

Beijing’s foreign ministry said it would raise its duties on US goods from their present level of 84pc from tomorrow.

However, it indicated it would not raise tariff levels any further as there was “no longer any possibility of market acceptance for US goods exported to China”.

Washington’s plan to dump its excess energy capacity on Europe is backfiring

https://www.telegraph.co.uk/business/2025/04/10/trump-drill-baby-drill-boom-already-risks-imploding/

“If you stare into the idiocy of Trumpian energy trade, tariffs, diplomatic belligerence, and wilful ignorance towards the real-world constraints of market economics, it becomes both mesmerising and terrifying.”

Ørsted urges Europe to act to avert wind energy ‘downward spiral’

https://www.ft.com/content/ce2db086-04d8-4e52-89b9-e45ebada5231

Ørsted, the world’s largest offshore wind power developer, has called on Europe to do more to support an industry at risk of a “downward spiral”, just as Donald Trump’s new tariffs heap further pressure on its ailing US operation.

Rasmus Errboe, chief executive of the Denmark-based industry pioneer, said European offshore wind was in a “tough place” due to rising costs, supply chain strains and uncertainty over electricity prices. He also said Trump’s new tariffs would have a “meaningful impact” on the cost of its projects in the US, where Ørsted has faced significant difficulties.

Errboe spoke to the Financial Times as Ørsted published a report calling for European capitals to commit to consistent annual support for the industry in order to meet offshore wind targets and help reverse rising costs.

“If you want to deliver on energy security, energy independence, affordability for Europe for the coming decades and meet the targets, then we need to make this change,” Errboe said.

“Rising costs and a higher . . . cost of capital due to increased revenue risk are making project economics unsustainable,” the report said. “Swift and decisive action is needed to avoid the risk that the industry enters a downward spiral.”

Europe is banking on offshore wind to meet its ambitious net zero goals, given availability of coastline and limited space for onshore projects. However, the comments from Ørsted is a stark sign of the industry’s challenges.

Ørsted wants European governments including the UK to commit to backing 10GW of offshore wind annually between 2031 and 2040 via contracts that guarantee developers a fixed price for electricity.

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Some executives have grown critical of the White House’s energy strategy.

“This administration better have a plan @SecretaryWright,” Kaes Van’t Hof, president of Diamondback Energy, said in a social media post this week aimed at energy secretary Chris Wright. “The only industry that actually built itself in the US, manufactures in the US, grew jobs in the US and improved the trade deficit (and by proxy GDP) in the US over the past decade . . . smart move.”

Adrian Carrasco, owner of Premier Energy Services, which is based in the Midland-Odessa region, said he was not panicking because a lot of shale producers hedge the price of oil that they sell for six to 12 months. But he said tariffs would raise costs for the industry.

“It’s a worry, because now their pricing has gone up an additional 25 per cent for buying drill pipe. When that’s going up and your price of oil being purchased is not going up, well, you have to adjust.”