A top North Sea operator said yesterday that the region’s tax regime is no longer fit for purpose – and said it “welcomed” the SNP’s fiscal vision for an independent Scotland.
EnQuest said it was engaging with the Scottish Government and that it would continue investing in Scottish waters regardless of September’s referendum outcome.
Chief executive Amjad Bseisu said yesterday that the statement was not an endorsement of Scottish independence – and the future of Scotland was a matter for the people.
But last night the SNP said that the comments were a “damning critique” of the way the industry had been handled by successive Westminster governments.
EnQuest is backing Sir Ian Wood’s push for a greater collaboration across the North Sea as companies try to access tricky pockets of oil.
But the firm believes the current tax system deters firms from working together.
“EnQuest believes that in some important respects the current system is out of date and no longer ‘fit for purpose’,” the company said in its annual accounts yesterday. The report goes on: “EnQuest also engages with the Scottish Government and welcomes statements that, in the event of there being an independent Scotland, the Scottish Government plans a stable and predictable fiscal and regulatory regime.”
Mr Bseisu added: “For both Westminster and Scotland, the oil business is extremely critical.
“It is the largest industrial business in Scotland by far, and the second largest in the UK as a whole.
“Either an independent Scotland or a Scotland within the UK will be good for our business, because they will both want us to invest significant amounts in the North Sea, in reviving this mature basin.”
Scottish Finance Secretary John Swinney seized on the comments yesterday.
“EnQuest’s damning critique of the mismanagement of the Oil and Gas fiscal regime by the UK Government is in stark contrast to their comments welcoming the Scottish Government’s plans for a stable and predictable fiscal regime for the oil and gas sector post-independence,” he said.
“We welcome this vote of confidence from a leading and growing oil company.
“EnQuest’s comments back up our concerns that successive UK governments have mismanaged Scotland’s huge oil and gas wealth, with multiple and sudden tax changes and a revolving door at the UK Energy department, with 14 energy ministers since 1997.
“Only last week the UK Government yet again illustrated their failure to support this vital industry by bringing forward their plans to increase charges for oil exploration – bringing adverse reaction from a range of industry experts including Oil and Gas UK.
“To add insult to injury, these plans come at a time when the industry is already flagging up concerns over the availability of drilling rigs.”
EnQuest saw pre-tax profits drop 7.5% to £226.5million for 2013, despite revenues increasing by more than 8% as the company’s output increased. Oil production reached an average of 24,222 barrels of oil equivalent per day, up more than 6% on 2012, but increased costs in transporting and producing the output at the Sullom Voe terminal hit the company’s bottom line.
The firm said it was looking for increased production from 2014 to between 25,000 and 30,000 barrels per day on average, as it looks to bring the Alma and Galia project on stream.
Almost £250million of the company’s projected £640million investment in projects this year will be on the giant Kraken project, with work on the Kraken FPSO due to start within the next few weeks
The company said it was also looking to carry out assessment work on the Greater Kittiwake Area after taking the field over earlier this year.
However, investors reacted strongly against EnQuest’s plans to raise an extra £300million in debt.