Cambo oil field owner reveals no tax to pay on project ‘for years’ due to ‘attractive’ UK rules
Written by Hit Music Radio News on 09/11/2021
The main owner of the controversial Cambo oil field has highlighted in a company presentation that it is not due to pay tax for “for many years” on its projects in the North Sea due to the UK’s “attractive” tax regime.
UK-based Siccar Point Energy co-owns Cambo with Shell. The field is thought to contain up to 800 million barrels of oil.
The government is due to grant a final permit to begin drilling there, prompting a national campaign from environmentalists to stop the new extraction of fossil fuels, as recommended by both the UN and the International Energy Agency.
In the company presentation, which is dated February 2021 and is publicly available, Siccar Point says that because of the UK’s “simplified and attractive tax regime … Siccar Point … is not forecasted to pay taxes for many years”.
As Prime Minister Boris Johnson prepares to return to COP26 to urge nations to be more ambitious, and as countries like Costa Rica and Denmark launch the Beyond Oil and Gas Alliance, the Siccar Point presentation highlights how the UK is viewed as a favourable place for fossil fuel corporations to do business.
Energy Research company Rystad Energy recently named the UK as the country that offers oil and gas companies the “best profit conditions” in the world “to develop big offshore fields”.
A spokesman for Siccar Point Energy told Sky News: “Siccar Point Energy is a UK company, with assets entirely based in the UK.
“It is subject to full UK taxation, and taxes will be paid when they fall due. Cambo is a multi-billion pound investment that will reduce the UK’s reliance on energy imports during the managed transition to net zero and create thousands of UK jobs.
“The project will not generate revenues and profits for a number of years, but when it does these profits will be fully within the scope of UK taxation.”
Siccar Point is not alone.
Sky News has already reported that some of the world’s biggest oil companies are currently paying negative tax on their fossil fuel extraction and production operations in the North Sea.
Official data published by the UK government-backed Extractive Industries Transparency Initiative shows that in the tax year 2019-20, ExxonMobil received £117m in total from HMRC, Shell got £110m, and BP received £39m.
In fact, a third of all significant energy companies operating in the North Sea paid negative tax last year.
This is possible in large part because of a UK tax policy that was brought in just a few months after the Paris climate accord was agreed in 2015, allowing oil and gas companies to claim back public money in order to help with decommissioning rigs and infrastructure as the UK progresses towards its net-zero carbon emissions targets.
It is also possible because companies are permitted to acquire the tax history – and associated benefits and write-offs – of oil and gas fields when they buy them, and are given significant capital expenditure allowances on new projects.
Campaign groups say current tax policies effectively amount to the British public subsidising fossil fuel extraction, even as they are being urged to make greener choices in their own lives.
Environmental lawyer and director of campaign group Uplift, Tessa Khan, told Sky News: “The UK government has set the rules in the North Sea so that it’s the most profitable country in the world for companies looking to develop big, offshore oil and gas projects, like Cambo.
“And it means, as a country, we are subsidising to the tune of billions the very companies that are driving the climate crisis.
“There can be no new oil and gas developments if we want a liveable climate. How can Boris Johnson stand in front of world leaders and demand that they change while he prevaricates over Cambo and the 30 other North Sea oil and gas projects awaiting approval?
“His government must step up and join those countries calling time on fossil fuel production.”
The UK government has insisted it is not allowed to intervene in the granting of licenses and permits, which is handled by a regulatory body called the Oil and Gas Authority.
Spokespeople cite advice from the independent Climate Change Committee, which acknowledges that fossil fuels will continue to be part of the UK’s energy mix in the coming decade, and the fact that all planned new extraction in the North Sea has been factored in to the net-zero carbon emissions strategy.
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