Centrica threaten North Sea gas field closure

mattUtilities Market Regulation, Wholesale Utilities Markets

Centrica has threatened to close one of the UK’s major gas fields over a tax dispute

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Centrica has closed three gas fields in Morecambe Bay for one month of maintenance, but has claimed it may not re-open one of them due to increased taxes.

George Osborne increased the tax on supplementary gas production from 20% to 32% in this year’s budget.

The tax, which can reach as high as 81% on profits made from older fields, is intended to raise the Chancellor £2bn to fund a cut in fuel duty.

British Gas owner Centrica have said that North Sea oil and gas production is subject to some of the highest tax levels in the world.

Centrica is now considering purchasing gas on wholesale markets, as it could prove cheaper than production from the South Morecambe Bay field.

The taxes on the North Sea have come under criticism, with accusations the tax is short-sighted, discouraging companies from setting up in the UK, and risking the loss of secure energy supplies which prove very useful in volatile times on the wholesale markets, or in winter when the UK gas demand is at its highest.