Another reason to leave Cambo oil under the sea

Siccar Point Energy

This letter by Leah Gunn Barrett, published in the Scotsman yesterday is worth of wider attention:

There is another reason to leave Cambo oil under the sea (Editorial, August 17). The chief developer of this oil field, Siccar Point Energy, is owned by a company registered in Luxembourg, Siccar Point Luxembourg SCA. What this means is that all profits, interest payments, supply and even labour chain contracts will flow through Luxembourg, not the UK.[1] 

So since there won’t be any UK tax revenue there is no economic case for developing this oil field. And the environmental consequences of doing so would be catastrophic.  Friends of the Earth Scotland has estimated that extracting and burning Cambo oil would result in carbon emissions ten times greater than Scotland’s annual emissions.[2] 

Contrast the UK Government’s mismanagement of Scotland’s oil with what Norway did. The UK Government wasted North Sea oil revenues on short-term consumerist policies such as mortgage tax relief and slashing national borrowing while selling off state-owned British Petroleum and British Gas. It then eliminated tax on Big Oil in 2016, effectively subsidising the obscene profits of an industry that is threatening life on the planet. These Big Oil tax rebates show up in Scotland’s national accounts as a ‘loss.’ 

Norway taxed oil companies for the privilege of operating offshore and had the foresight to create the world’s largest sovereign wealth fund. It retained a majority stake in its state energy company and has generated £386bn more than the UK in tax revenues since the production of oil and gas began.[3] Citizens, not shareholders, benefited. 

Herein lies the case for restoring Scotland’s independence. The SNP Government only needs to make it. 

11 thoughts on “Another reason to leave Cambo oil under the sea”

    1. Absolutely. Paul Krugman in the NYT’s points out there has been little real improvement in wind and solar technology in decades, but initial subsidy ( mostly in Europe) has led to more and more utilisation and the price has plummeted as the growing use of renewables leads to substantial cost reductions—-through mass production of components and the industry learning, as it gains experience.

      Its win-win, but Scotland has to become master of its own assets to maximise social and employment gains.

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    2. More to the point we should be keeping reserves in the ground until we actually control them. Then, if viable and desirable, we can develop them and actually benefit from them (see my post below on how investment firms are creaming off the cash now).

      Liked by 3 people

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  2. Ah, they may not pay taxes but I would expect a wee bit of baksheesh will wing its way Tory-wise.

    They sent a flunky from our Colonial Office (Scotland district) , which has zero power, influence or responsibility for the exploitation of Scotland’s assets, to entertain the oil magnates.

    Perhaps he did cards trick or juggled, while standing on his head.
    The Toadie Tories are clever like that!

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  3. It’s a very reasoned argument, yet runs completely contrary to London thinking and Tory dogma so will get zero traction with the media.

    I’d mused on the apparent panic in London to reset lets on existing fields and let new fields, particularly in a global warming “red alert”. What happened to “it isn’t worth pumping out of the ground” ?
    Then the thought crossed my mind that shackling an Indy SG with legally binding contracts and struggling revenues epitomised “perfidious albion”, the risk of independence was heightening, only stalled by “now is not the time” rhetoric to allow the maximum damage to be done.

    In light of LGB’s observations, I suggest this is the only alternative explanation to back door transactions to benefit Tory donors in offshore jurisdictions.

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  4. A long post and a broad brush but stick with me!

    Sicur are small fry. Consider Harbour Energy. Anyone heard of them? No? Thought not.

    First a bit of history.

    Not so long ago Shell bough out British Gas. They were after BG’s large assets, not the ageing UK assets, specifically the Armada field. Shell decided to sell up their North Sea assets Lomond, Everest and the former BG Armada platform.

    Harbour are a London based investment fund. They formed a company called Chrysaor and bought up these assets and set about making efficiency cuts and going on to make a handsome profit. They’d be taxed on that profit, so how can they avoid tax? Don’t make a profit! So how could they do that?

    (for non Greek mythology buffs Chrysaor was a flying pig and the brother of Pegasus – yes a flying pig is now the UK’s biggest O&G producer!!!)

    Meanwhile in 2018, ConocoPhillips wanted to dump their UK assets, specifically their J-Block SNS (Southern North Sea) assets so ‘Chrysaor’ did the deal and bought them up thus avoiding any corporation tax and securing more portfolio. They then preceded to make another handsome profit, and a potential tax bill. So what to do?

    Well, Premier Oil had made a mess of their business model and were up to their eyeballs in debt so…. Chrysaor performed a ‘reverse takeover’ thus acquiring the Premier assets, and access to the stock market (Chrysaor/Harbour are privately owned, whilst Premier are listed).

    So, more assets, more profits, access to the stock market, but once again no profit and no tax bill.

    Chrysaor recently changed their name to Harbour Energy and are now the biggest oil and gas producer in the UK.

    So here we are in 2021 and our oil and gas resources are being funneled into a London based investment firm, essentially a privately owned entity.

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    1. Then there is the Chinese interest in North Sea Oil which takes the form of ownership of two North Sea oilfields.

      https://www.businessinsider.com/chinas-cnooc-largest-oil-operator-in-scotlands-north-sea-2016-8?r=US&IR=T

      In addition that same year, 2016, a state-owned Chinese company as part of an Australian/Qatari conglomerate bought a majority interest in the UK Gas network from the National Grid. The Chinese company is the majority shareholder in the conglomerate.

      https://www.independent.co.uk/news/business/news/national-grid-sells-shares-china-qatar-investors-a7463256.html

      Then in 2019 this:
      “”A significant gas discovery in the central North Sea is being described as the biggest find in more than a decade. Chinese state-owned company CNOOC said it made the gas discovery – equivalent to 250 million barrels of oil – in its Glengorm project, east of Aberdeen.29 Jan 2019
      https://www.bbc.co.uk › news › uk-…
      Gas find in North Sea hailed as ‘biggest in a decade’ – BBC News””

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  6. I suspect that the real value of our oil to the London treasury is support of Sterling.
    Without it,the cost of servicing their burgeoning debt would spiral out of control.
    It is only slightly under control as it is.

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  7. There is so much about this letter/blog post that merits a response as it seems to me a mash-up of diverse and sometimes hardly related issues. For now here are a few comments (for starters?):

    1) we are of course aiming (presently) for ‘net zero’ not ‘gross zero’ in terms of carbon emissions

    2) this fact alone IMHO demands that a transition is designed and implemented which takes account of ‘whole’ system’ factors and does not get overly hung up on a symbol called the Cambo Field

    3) it is important to factor in that the UK presently is a net importer of oil & gas – that is significant when deciding the short to medium term fate of indigenous production

    4) as an importer, the key is to reduce the within UK/Scotland DEMAND for oil & gas – the planet doesn’t care if the carbon emissions come from the use of Cambo oil or imported Norwegian oil

    5) if we actually do need oil and/or gas in the UK/Scotland at certain volumes for a transitional period then why increase import dependency unnecessarily in order to obtain these? Indeed why not reduce import dependency AND an overall reduction in demand?

    Using indigenous resources optimally as long as we still have a level of demand seems to offer many advantages – environmentally, fiscally, economically – IF better, appropriate transitioning policy is implemented. We could bring forward the decommissioning of older ‘dirtier’ production facilities. We could ensure a decent tax take on production and hypothecate this for use to say accelerate tidal energy technology deployment or accelerate at scale carbon capture and storage or accelerate carbon reduction in domestic heating. The aim – to repeat – is net not gross zero.

    6) the deficiencies in Westminster’s policies regarding corporate governance, sources of risk finance, tolerance of tax havens, hydrocarbon production and corporate tax regimes, and historic squandering of oil & gas wealth (unlike Norway) – all mentioned in the letter/post – are legitimate charges to levy but are not in my view germane to specific decisions on Cambo Field and not to what is optimal in terms of the Cambo decision for SCOTLAND’S transition to net zero, especially if we are contemplating independence any time soon.

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