Telegraph today17 May 2024 06:37
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US oil giant to quit North Sea after 55 years
Chevron says departure is not linked to Chancellor’s refusal to scrap windfall tax on industry profits
JONATHAN LEAKE
THE US oil giant Chevron has announced it will quit the North Sea after 55 years, the day after Jeremy Hunt turned down industry pleas for support at a private meeting.
Chevron said that it had decided to leave the region following a review of global operations to determine “whether assets are strategic and competitive for future capital”. The company insisted this was not connected to Britain’s tax regime.
It came a day after Mr Hunt rejected calls for respite from a windfall levy that has driven up the tax on oil profits to 75pc. Industry leaders told Mr Hunt there was “one last chance” to halt a “catastrophic” decline in investment in UK waters that risks reducing oil and gas output by at least 50pc by 2030.
However, the Chancellor is understood to have made no promises to change tack – claiming that Labour’s threats to increase the windfall tax by another 3pc and to cut investment allowances should it win the election were the key deterrent to investors.
The meeting was attended by most of the North Sea’s major operators, including Shell, BP, Harbour Energy and Ithaca Energy. Chevron was not in the room, but was briefed on the outcome by industry body Offshore Energies UK.
The company claimed the timing was coincidental. A spokesman said: “Chevron’s announcement is not related to recent announcements relating to the UK windfall tax. The announcement relates to assessing a global portfolio that provides best shareholder return.”
Chevron is the world’s third largest oil company and is one of the last major players still in the North Sea. Exxon left in 2021 and others, such as Shell and BP, have sold off many of their assets.
The company is to sell its 19.4pc stake in the Clair Field, which is 50 miles off the coast of Shetland and is the largest in UK waters with an estimated 8bn barrels of oil. It will also dispose of associated assets including interests in the Sullom Voe terminal, the Ninian pipeline and the Shetland Island regional gas export pipeline.
The deal is expected to raise between $800m (£630m) and $1bn once a buyer is found. Chevron was among the first oil companies to drill in the North Sea in the 1960s, but has since pulled out of exploration and production after offloading its drilling assets in 2019.
Analysts say that the North Sea’s output is already in decline because the biggest oil and gas fields have been drained – so finding and extracting what remains is already becoming more expensive. They warn that burdening the industry with extra taxes is bound to be a deterrent to further investment, pointing to a similar cutback by Harbour Energy, the UK’s biggest oil and gas producer, which has halted all North Sea investment.
Chris Wheaton, an analyst at Stifel, publish
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