Talisman breathes new life into N.Sea with $2.55 bln investment
By Sarah Young
LONDON Oct 24 (Reuters) - Canada's Talisman Energy will invest 1.6 billion pounds ($2.55 billion) in one of its oldest oil platforms in Britain's North Sea, taking advantage of tax breaks announced last month and providing a shot in the arm for the declining region.
Britain's government, under pressure to stimulate economic growth, introduced a tax break for older oil fields in September to try to revive the North Sea after a dramatic fall in oil and gas output shaved at least half a percentage point off UK growth in 2011.
In a sign that the new tax regime is already paying dividends, Talisman said on Wednesday that it will invest 1.6 billion pounds to redevelop the Montrose Area, off the coast of Scotland, confirming a statement it made in September.
Geoff Holmes, senior vice president of Talisman Energy (UK), said that the project would not have gone ahead without the tax break and that most of the 100 million barrels that the project will develop would have been left in the ground.
Britain's oil and gas production, long a boon for now dire public finances, peaked in 1999 and the oil industry forecast that the region's decline could accelerate after the British government hiked a tax on producers by 12 percent in March 2011.
"We must do all we can to prolong the economic life of our oil rich seas and make the most of this precious resource," British Energy Minister John Hayes said in a statement.
The government approved Talisman's plans on Wednesday, the second North Sea project to be given the go-ahead in three days, after Shell and Exxon Mobil's Fram field was sanctioned on Monday.
The tax breaks for older fields, which are often more costly to run, are the latest measures introduced since last year's tax hike, as the government takes steps to reverse the impact of the tax rise and maximise oil production. Continued...