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TAQA taking advantage of tax initiative

TAQA taking advantage of tax initiative
The UK arm of Abu Dhabi national energy company TAQA revealed yesterday it is to take advantage of a recent UK Government tax incentive to bring on stream an undeveloped accumulation of oil in the North Sea.

The UK arm of Abu Dhabi national energy company TAQA revealed yesterday it is to take advantage of a recent UK Government tax incentive to bring on stream an undeveloped accumulation of oil in the North Sea.

Next month, TAQA Bratani will begin exploration and appraisal drilling in the area to the north of its Tern field, which produces about 10,000 barrels of oil a day.

Development of Tern North is expected to begin as soon as possible thereafter, with production likely to be tied back to the nearby Tern platform.

Neither the size of the accumulation being targeted nor the value of the work has been disclosed, but TAQA Bratani has previously announced it plans to spend nearly £500million in UK waters this year alone.

The Tern North project follows an announcement by the government in May 2008 to allow new oil and gas fields to be carved out of unprofitable parts of some existing fields without having to pay petroleum revenue tax (PRT).

Tern North will not be subject to PRT because it is to be classified as a new field.

This is only the second such reclassification request.

TAQA said that, without the government support, Tern North would not have been commercial and any oil in place would not have been recovered.

TAQA Bratani managing director Leo Koot said: “This is excellent news for TAQA and underlines the importance of government understanding the difficult fiscal environment faced by operators in the North Sea and working with us to ensure we increase indigenous supplies. While TAQA Bratani has increased delivery from our mature assets in the UK continental shelf, an increase in exploration activity is vital to ensuring secure energy sources for the UK and future job prospects in the industry. The PRT exemption will allow TAQA to keep its promise of commitment to realise the full potential of the North Sea.”

Energy Minister Lord Hunt said: “Agreement to TAQA’s request for redetermination of the boundaries of the Tern field demonstrates the government’s desire to realise the full hydrocarbon potential of the UK continental shelf.

“Our door is open to other companies wishing to make a similar case.”

Mike Tholen, Oil and Gas UK’s economic director, said: “It is essential that the Treasury, Department of Energy and Climate Change and industry continue to work together to promote investment in existing fields, many of which also struggle to compete for capital in the international environment.”

Mr Koot also revealed that he expected TAQA Bratani’s North Sea oil production to peak in 2012 at about 60,000-65,000 barrels per day, compared with a current total of around 40,000.

TAQA completed its £420million acquisition of interests in seven oil fields from Shell UK and Esso in December 2008. The deal included operatorship of the Tern, Kestrel, Eider, North Cormorant, South Cormorant and Pelican fields.

Details of the tax initiative can be found online at:

https://www.og.decc.gov.uk/regulation/guidance/fld_bound_redeter.pdf

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