CNR International threatens to exit North Sea over sluggish fiscal reforms
CNR International, the operator now decommissioning the North Sea’s Murchison platform, has said its focus would shift now to west Africa because UK government fiscal reforms relating to the North Sea are too little, too late.
James Edens, vice-president and managing director of CNR International, told Chief Secretary to the Treasury Danny Alexander on Thursday 4 December that proposed changes to the tax regime were not coming quickly enough. At a meeting in Aberdeen attended by Mr Alexander and industry figures, Mr Edens said CNR International had been expecting more.
“We put a plan together expecting bigger changes than what we realised today, so we have to react to that. The office also supports our west African business. That is where our focus will shift now,” he said, Energy Voice reported.
The proposals announced by Mr Alexander include: the possible transferability of decommissioning tax reliefs; reforming the fiscal treatment of infrastructure; a basin-wide ‘investment allowance’ to simplify and replace the existing system of offshore field allowances; and measures to stimulate exploration, including financial support for seismic surveys in underexplored offshore areas and further discussion on possible fiscal measures, such as tax credits.
But more negotiations with industry were needed, Mr Alexander said.
At this, Mr Edens expressed his dissatisfaction.
“The speed of change here is too slow – you must speed up, you must accelerate,” he told Mr Alexander. “I started talking with government in 2010 about the need for fiscal change to support late life. Five years in, they finally get the message.
“Right now my business needs support. There’s tremendous potential in the basin but it has got to be connected with the right fiscal outcomes. We said exactly what was required to make this a competitive basin on a worldwide basis. And we hear now that we have to wait longer for that to happen. I’ve got other things to do with my cash and my talent in the meantime.”
In June last year CNR International unveiled a £300m investment package to extend the life of the Ninian field, one of the oldest in the North Sea. Mr Edens’s comments will raise questions over whether the firm will proceed with those plans.