Serica Energy is one of Britain’s top ten oil and gas producers, which delivers around 41,000 barrels of oil a year.
Its portfolio of new projects includes the Buchan redevelopment – 120 miles north-east of Aberdeen – the third-biggest underdeveloped field in UK waters behind Rosebank and Cambo.
Its chairman and acting chief executive is David Latin, an industry veteran with more than 30 years of experience working in the upstream sector including senior roles at BP and the multinational oil giant, OMV Group, where he headed its Norwegian operations.
In other words, he knows his onions.
Which is why when Latin warns that the Government’s insane tax war on oil and gas producers is driving Serica to look at new investments elsewhere in the North Sea – such as Norway – we should shudder. And possibly weep.
Squeezed: The government is keeping its ‘windfall profits’ tax in place long after any possible justification for it based on oil and gas prices
The incongruity is too much to bear: the fact that Britain’s penal tax regime might force a British oil producer to go to the land of the oil-rich Vikings to explore for energy when we still have our own black gold is absurd.
Yet that is the state of play which Latin is warning about, not just for Serica but other UK oil producers.
If Serica and its peers do go elsewhere, so will the UK jobs, the tax revenues and more critically, energy security.
Why, you have to ask, would any government willingly penalise its oil producers after the energy shock triggered by Russia’s war on Ukraine, sending oil and gas prices soaring and inflation rocketing?
Quite rightly Latin points the finger at Westminster – rather than Moscow – for the trouble facing the sector.
Perversely, the Government is keeping its ‘windfall profits’ tax in place long after any possible justification for it based on oil and gas prices. (Serica sold oil at $63 per barrel of oil equivalent last year, compared with $104 in 2022).
What’s more, Chancellor Jeremy Hunt extended the tax to 2029. Labour will hit the industry even harder if it comes to power: the party has threatened to increase the tax rate to 78- per cent and reduce the capital relief on investment, as compared to the present regime.
If current tax policy succeeds in driving oil producers elsewhere, there is only one option: we will have to import more.
Even the most ferocious of the anti-fossil fuel brigade know that we will need more oil and gas for decades to cover the transition period. Until now, maximising the recovery of the remaining UK reserves has been the agreed policy.
But as the Serica boss points out, this policy has clearly been abandoned because of the Government’s short-termism.
That has huge consequences; more volatile and unreliable imports, less UK tax revenues, fewer high-quality jobs and more carbon because supplies have to travel.
The Government’s position is not only risible in the short term but goes against all attempts to maximise energy security for future generations.
So, too, is Labour’s plan to push up taxes but also to stop new North Sea exploration licences.
Ironically, Labour probably won’t need to because explorers like Serica will have gone hunting in other waters.
GMB union leader Gary Smith calls Labour’s policy economically illiterate. The tragedy is that Tory policy has been equally illiterate.
No to exchange boss pay hike
Investors have a tricky decision today. They vote on whether David Schwimmer, boss of the London Stock Exchange Group, should be paid another £7million, taking pay to £13million.
Advisory firms ISS and Glass Lewis are urging them to vote against.
The exchange says he should be paid like his peers running Nasdaq or data firms such as S&P Global.
It points out that since taking over six years ago, the American lawyer-turned-Goldman Sachs honcho has doubled the share price.
While true, this was because of the $27billion takeover of Refinitiv, which lifted shares and turned it into a data provider that now accounts for the bulk of revenues.
And that’s the elephant in the room: is it a data provider or a capital-raising stock exchange? Can it be both?
The London exchange and Aim, its junior market, are struggling amid defections to Wall Street and low valuations, leading to a takeover frenzy, mainly from US firms, and onerous regulations.
Schwimmer must show how he plans to improve performance – to be more like go-getting Nasdaq – before he gets a hike.
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