Yahoo Finance British oil producer to cut back on North Sea projects
A London-listed oil producer is delaying new drilling at its flagship North Sea field, becoming the latest British company to blame the windfall tax for curbing its plans.
Enquest said the raid on profits had led it to “optimise its capital programme”, with spending for 2023 now estimated at $160m (£134m) and extra drilling planned for its flagship Kraken field deferred.
Amjad Bseisu, chief executive, said the Government’s Energy Profits Levy would “have implications for our capital allocation strategy and our UK production growth ambitions”.
Enquest is the third oil and gas producer to publicly announce changes to its plans in response to the increase in the levy from 40pc to 75pc to pay for support for households struggling with high energy bills.
Harbour Energy, the North Sea’s largest producer, last month blamed the windfall tax as it flagged major job cuts and said it would “reassess our future activity levels in the UK”.
Harbour did not specify the number of jobs expected to go, but industry sources believe it is in the hundreds.
TotalEnergies, the French oil and gas giant, has said it will cut North Sea investment by £100m or 25pc this year owing to the higher tax, which is due to remain until 2028.
Several oil and gas companies want the Chancellor, Jeremy Hunt, to introduce a floor so that the tax is removed as oil and gas prices fall.
Oil and gas prices have fallen back to levels seen before Russia’s invasion of Ukraine. Soaring prices in the wake of the invasion were the trigger for the tax.
Despite the deferral of drilling at Kraken, Enquest plans to push ahead with investment at other fields, Magnus and Golden Eagle.
The delay at Kraken is not expected to dent Enquest’s output this year, as the drilling was not expected to bring on extra supplies until towards the end of the year.
Kraken produced 18,396 barrels of oil equivalent per day (boepd) in 2022. Enquest overall produced 40,801 boepd in the UK and 6,458 boepd in Malaysia.
