North Sea discovery to provide £2bn boostBY RUSSELL LYNCH
The Catcher East oil discovery in the North Sea could spell a £2bn tax boost for the UK's public finances, an industry expert said yesterday.
Based on recoveries from previous finds and oil prices of $80 a barrel, Catcher's 120m barrels could generate around £200m a year in revenues over a decade when production gets under way, according to Numis analyst Sanjeev Bahl.
Production from the North Sea fields has provided a welcome boost to the UK public finances since the early 1980s.
Although it has been in decline since 2000 and the country became a net importer of oil in 2005 for the first time in 25 years, offshore corporation tax revenues are still expected to hit £7.6bn in the current financial year.
But Catcher is small compared to other recent major finds such as BP's billion-barrel Tiber discovery in the Gulf of Mexico last year.
North Sea fields currently produce around 500m barrels of oil a year, but auctions of assets in the region by major players have flopped as oil and gas explorers turn away from maturing regions to look elsewhere.
Energy minister Charles Hendry called the North Sea "an important hub for investment" as he approved the development of the 18-m barrel Bacchus scheme, but even the much bigger Catcher East is unlikely to be a "game-changer", said Panmure Gordon's oil analyst Peter Hitchens.
"It has been picked over by the majors for the past few decades, but the industry is now concentrating in different areas. It is now the smaller guys who can eke out 10-15 million barrels but it is not going to change things for the UK," Mr Hitchens added.
There are still relatively unexplored "frontier" regions in the North Sea however - such as West of Shetland - which offer some potential.
French firm Total for instance has a major presence in the region through its Laggan discovery, a medium-sized gas field north-west of the Shetland Islands.
Meanwhile, oil giant BP has said the cost of cleaning up the oil leak in the Gulf of Mexico has now reached $2.65bn (£1.76bn). The total has risen to an average of $100m every day in the past three days, the highest daily average yet.