Fifteen chief executives of gas companies have written to Prime Minister David Cameron warning that his new £10bn tax on North Sea production will lead to job losses and bigger gas bills for British households.
The bosses of major companies, including Centrica, Shell, BHP Billiton and E.ON UK, also told the Government that the tax will increase reliance on imports and damage Britain's energy security. In the Budget, Chancellor George Osborne raised the levy on oil and gas output by 12 percentage points to between 62pc and 80pc of profits depending on the size of the field.
There have been protests from both oil and gas producers, but on Friday the 15 company chiefs expressed "deep concern" about gas drilling.
In the joint open letter, they said: "We recognise the fiscal pressures the Government is facing, but believe it will damage the UK economy by reducing the attractiveness of investing in the UK Continental shelf, particularly in gas development and production. This, in turn, will accelerate the UK's reliance on imported gas and lead to increased costs for domestic customers."
They point out that gas projects are just as expensive as oil projects, but while oil is trading at $105 per barrel, companies can only get the equivalent of $49 per barrel for their gas.
"The UK gas production sector employs thousands of skilled individuals who use their expertise to extract the last reserves of UK gas for use by British energy consumers and power generators," they added.
"The cancellation of projects and resulting premature decline of the North Sea will cause jobs to be lost and accelerate the nation's reliance on imported gas. This will increase consumer gas prices beyond the rises already indicated by the sharp rise in wholesale costs.
Electricity bills will also be hit as gas is the marginal fuel for power generation and the power generation mix will become higher carbon as coal becomes cheaper relative to gas."
Other companies to sign the letter include Bayerngas UK, Bridge Energy, ConocoPhillips, DONG Energy, Endeavour, GDF SUEZ, iGas, Perenco, Total and Tullow Oil. Collectively, they represent 60pc of UK gas production.
Chris Huhne, the Energy Secretary, defended the tax in front of the energy committee on Wednesday, saying its impact on jobs and the economy would be "marginal".
Source: www.telegraph.co.uk
The bosses of major companies, including Centrica, Shell, BHP Billiton and E.ON UK, also told the Government that the tax will increase reliance on imports and damage Britain's energy security. In the Budget, Chancellor George Osborne raised the levy on oil and gas output by 12 percentage points to between 62pc and 80pc of profits depending on the size of the field.
There have been protests from both oil and gas producers, but on Friday the 15 company chiefs expressed "deep concern" about gas drilling.
In the joint open letter, they said: "We recognise the fiscal pressures the Government is facing, but believe it will damage the UK economy by reducing the attractiveness of investing in the UK Continental shelf, particularly in gas development and production. This, in turn, will accelerate the UK's reliance on imported gas and lead to increased costs for domestic customers."
They point out that gas projects are just as expensive as oil projects, but while oil is trading at $105 per barrel, companies can only get the equivalent of $49 per barrel for their gas.
"The UK gas production sector employs thousands of skilled individuals who use their expertise to extract the last reserves of UK gas for use by British energy consumers and power generators," they added.
"The cancellation of projects and resulting premature decline of the North Sea will cause jobs to be lost and accelerate the nation's reliance on imported gas. This will increase consumer gas prices beyond the rises already indicated by the sharp rise in wholesale costs.
Electricity bills will also be hit as gas is the marginal fuel for power generation and the power generation mix will become higher carbon as coal becomes cheaper relative to gas."
Other companies to sign the letter include Bayerngas UK, Bridge Energy, ConocoPhillips, DONG Energy, Endeavour, GDF SUEZ, iGas, Perenco, Total and Tullow Oil. Collectively, they represent 60pc of UK gas production.
Chris Huhne, the Energy Secretary, defended the tax in front of the energy committee on Wednesday, saying its impact on jobs and the economy would be "marginal".
Source: www.telegraph.co.uk
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