US oil giant Chevron has announced that it will be leaving the North Sea after 55 years. The decision comes just a day after UK Foreign Secretary Jeremy Hunt refused to scrap a tax that the industry had been urging for support on. Chevron stated that their decision was not related to the UK’s tax regime, but rather a review of their global operations.
The UK government has refused to provide relief from a windfall levy on oil profits, despite industry leaders warning of a potential 50% decline in oil and gas output by 2030. This decision could have catastrophic consequences for investment in UK waters.
The Chancellor of the Exchequer recently met with major operators in the North Sea, such as Shell and BP. During the meeting, there were discussions about potential changes to the windfall tax and investment allowances. However, the Chancellor did not make any promises to change course. It is believed that the main concern for investors is the Labour party’s threats to increase the windfall tax and cut investment allowances if they were to win the election.
Chevron, the global energy company, has announced that it will be cutting around 1800 jobs worldwide. The decision comes as the company assesses its global portfolio to ensure the best return for its shareholders. Chevron insists that the timing of the announcement is coincidental and not related to recent discussions about the UK windfall tax.
Chevron, the third-largest oil company in the world, plans to sell its 19.4% stake in the Clair Field. This field, located 50 miles off the coast of Shetland, is the largest in UK waters and holds an estimated eight billion barrels of oil spread over 85 square miles. Chevron’s move follows the departure of other major players like Exxon, Shell, and BP from the North Sea.
Chevron, a major oil company, is planning to sell its remaining assets in the North Sea. This includes interests in the Sullom Voe Terminal, the Ninian Pipeline, and the Shetland Islands Regional Gas Export pipeline. The deal is expected to raise between $800 million and $1 billion once a buyer is found. Chevron has been reducing its presence in the North Sea since 2019 when it sold its drilling assets.
The North Sea’s oil and gas output is decreasing as the largest fields are running dry. This means that finding and extracting the remaining resources is becoming more costly. Experts are cautioning that imposing additional taxes on the industry will discourage further investment. They highlight the example of Harbour Energy, the UK’s largest oil and gas producer, which has already stopped investing in the North Sea.
According to Chris Wheaton, an analyst at Stifel, windfall taxes could speed up the decline of North Sea oil and gas production. This could lead to a 70% decrease in output by 2030, making the country more dependent on imports.
A critic of the windfall tax and Labour’s proposed increase has warned that it could lead to job losses and a decline in skills for the energy transition. According to Mr. Wheaton, around 100,000 out of the 200,000 jobs in the industry are at risk of disappearing by 2029. Additionally, he noted that the UK is expected to import 80% of its gas by the end of the decade.