ALEX BRUMMER: BP selling up in the North Sea is a bleak verdict on our nation’s decline
BP’s decision to quit North Sea oil exploration and production after six decades is testament to the betrayal of Britain’s energy security by successive governments.
No company is more associated with British oil and gas extraction, refining and the nation’s forecourts than what used to be called British Petroleum.
Yet the UK’s mad dash for ‘green’ energy and the Treasury’s constant chopping and changing of taxes on oil giants has seen two of the nation’s biggest beasts, Shell and BP, quit the region in the past two years.
Ill-conceived government policies are similarly destroying Aberdeen as one of the great centres of energy engineering and threaten the very future of BP as a standalone company listed on the London market.
Ed Miliband may have been moved from the Department of Energy to the Foreign Office but his reign of terror against fossil-fuel producers must be regarded as one of the greatest examples of industrial sabotage in British history. He has been aided and abetted by a compliant Treasury which allowed headline taxation of oil and gas income from British waters to soar to an eye-popping 78 per cent, with this preposterously high rate built into the Government’s fiscal plans until 2030.
The decision by BP’s new, chief executive Meg O’Neill to sell off five North Sea production hubs, including the valuable Clair oil field, represents an important moment for Burnham’s Government. The Prime Minister has said that the North Sea is a resource ‘we can’t ignore’ but is still hesitating, despite pressure from Donald ‘Drill, Baby, Drill’ Trump and demands from the Tory opposition to tap these rich reservoirs again.
Part of the BP Eastern Trough Area Project platform in the North Sea, around 100 miles east of Aberdeen, Scotland
Ed Miliband still holds huge sway over Labour’s Left and has been replaced as Energy Secretary by the socialist economist Miatta Fahnbulleh, writes Alex Brummer
How Burnham responds to BP’s decision will be an enormous test of his leadership. The dogmatic Miliband still holds huge sway over Labour’s Left and has been replaced as Energy Secretary by the socialist economist Miatta Fahnbulleh.
Failure to overrule their zealotry would be a signal of weakness in general and an unwillingness to take on the Left in particular – as well as a decision likely to leave us all poorer.
Just as damaging as the lack of production is our tax regime. In response to the bumper profits of BP, Shell and lesser British oil companies, so-called ‘windfall profits’, often caused by war and revolution, have been used to justify an array of new levies. The North Sea has been the victim, lumbered with a confusing litany of surcharges even though most of the alleged excessive income is earned overseas. Needless to say, none of this has made energy cheaper – indeed Britain’s consumers and businesses now shoulder the highest fuel bills in the Western world.
North Sea oil producers, including BP, are fed up with the frequent changes to the tax regime, which discourage long-term investment. In sharp contrast Norway, one of the UK’s biggest suppliers, also has a high tax regime but it has remained steady and predictable, encouraging new exploration and production.
A series of boardroom bust-ups and mishaps has left BP without a permanent chairman and under pressure from renegade shareholders demanding better returns. Lopping off the North Sea, where production and tax costs are high, is an obvious move.
The most important victim, unless government and the Treasury come to their senses, will be Britain’s energy security: vital at a time of global conflict. Without change, domestic, industrial, and retail users such as pubs, will continue to suffer punishing utility bills – and our country’s decline will continue.
