Centrica mothballs gas field

Centrica, the parent company of household gas supplier British Gas, has carried out its threat not to reopen one of the UK's largest gas fields following the Government's decision to raise taxes on production.







The energy firm said South Morecambe, the largest of three production areas that make up the offshore Liverpool Morecambe Bay gas field, would stay shut following routine maintenance work because the higher levy announced in the Budget now made it uneconomic to operate.



The group first flagged up the possibility of mothballing the field in May when it said the Government's decision to increase the offshore drilling tax from 20% to 32% would cost it an additional £300 million in total.



The change raised the marginal rate of tax paid on gas produced at South Morecambe to 81% from 75%, a level where the firm says it is now cheaper to buy in from abroad.



At a wholesale price for gas of 58.9p per therm currently, analysts estimate Centrica would make a profit of just 7p after deducting the cost of production and tax.



Morecambe Bay can supply about 6% of total UK gas demand or about 12% of domestic demand. The smaller North Morecambe field is expected to return to production within the next few days as it will be taxed at a lower rate.



None of the 400 staff who work at Morecambe Bay are being laid off and Centrica said it would assess on a daily basis whether to keep South Morecambe shut.



Chancellor George Osborne increased oil and gas production taxes to help pay for a reduction in fuel duty for motorists but the move has sparked fury from the UK oil and gas industry.



Centrica's chairman Sir Roger Carr said at its recent AGM: "It's probable that these changes will affect our plans to invest in the UK North Sea, which will have an impact on jobs and North Sea investment."



John Cridland, the director-general of employers organisation the CBI, also said yesterday he had written to the Chancellor urging him to reconsider the move or else allow older, more costly fields to be exempt.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing