Oil firms may move rigs out of UK waters

MAJOR UK oil and gas firms are drawing up plans to move their drilling rigs out of the North Sea’s British waters to avoid punitive changes to the tax regime, City A.M. has learned.

British gas owner Centrica and others are considering plans to move rigs out of UK waters to Norwegian and Dutch areas of the sea to avoid a 12 per cent hike in oil production taxes.

Centrica told Treasury officials and government ministers at meetings last week that it is also reconsidering £700m of new North Sea investment it announced only in February.

Sources close to Centrica told City A.M. that “a number of companies are looking at their options” and that they could “refocus their production” in the region if the tax was imposed.

A Centrica spokesman said no decision had been made on moving rigs out of UK waters but said the firm was “assessing the impact” of the tax raid.

“We are assessing the impact of the proposed tax increase on all of our operations and projects that we have in our plan and that includes the £700m investment,” he said.

Michael Tholen, economics and commercial director at UK Oil and Gas, said rigs could be easily moved across borders by tug boat or internal engines and linked to new pipelines.

“It is wholly understandable that companies which have operations in both the UK and the Netherlands may now switch investment abroad,” he said.