Morecambe Bay gas field closure threat

A LARGE gas field in Morecambe Bay is under threat of closure due to increases in tax.

The British Gas field, which is owned by Centrica, is set to close three fields in Morecambe Bay for a month of maintenance and says it might not reopen one of them.

Chancellor George Osborne raised supplementary tax on oil and gas production from 20% to 32% in his budget.

Centrica says UK producers now face some of the highest taxes in the world.

The company has closed the Morecambe Bay North and Rivers gas fields for about four weeks’ planned maintenance.

It is also shutting the South Morecambe field for an unspecified period of work, and the firm says it might not be restarted.

A spokesperson said: “UK oil and gas producing fields are now subject to some of the highest levels of tax in the world.

“At these higher tax rates, Morecambe’s profitability can be marginal. Accordingly, we may choose to buy gas for our customers in the wholesale markets in preference to restarting the field after planned maintenance. Companies are reflecting real concern. They just don’t need this grief.”

Morecambe Bay produces about 6% of the UK’s annual gas requirements, or up to 12% of residential gas demand, according to Centrica.

The company says the tax increase means its North Morecambe field is now subject to a 62% tax rate and South Morecambe 81%.

The Chancellor’s move, in his Budget in March, was designed to raise £2bn to fund a cut in fuel duty.

Industry bosses have criticised the new tax, describing it as short-sighted.