Posts tagged "North Sea"

BP rebuked over North Sea oil leak

Norway’s oil and gas safety authority blames poor maintenance and serious breaches of regulations for Ula incident

BP has been rebuked by the Norwegian oil and gas safety authority after a leak at one of its major North Sea platforms last year.

The watchdog accused BP of poor maintenance and “serious breaches of regulations”. The criticism is another blot on the company’s safety record and is the second such censure in the last two years.

Norway’s Petroleum Safety Authority said BP’s maintenance systems were deficient, and demanded a review of the company’s management of the platform at the Ula field “with a view to assessing whether it is adequate for identifying and managing risk”. The UK company has also been asked to explain why its maintenance was so inadequate that a “substantial” leak occurred last September.

An estimated 125 barrels, or 20 cubic metres, of oil flowed out of the leak, along with 1,600kg of gas, from the installation on the Ula field at the southern end of the Norwegian continental shelf.

Production was halted for 67 days as a result of the leak, from a field that is estimated to hold nearly 100m barrels of recoverable oil.

While no one was injured, “the incident had the potential to become a major accident, with the risk that a number of lives might have been lost and substantial material damage caused,” according to the PSA’s report.

The incident followed a fire in July 2011 at a platform on the Valhall field, also in the North Sea, which forced a shutdown of more than two months and was also investigated by Norway’s PSA. No one was seriously injured in that incident either, but the regulator warned that the fire could easily have spread and caused fatalities.

Both incidents were an embarrassment to BP, which has been under fire for its safety breaches, notably the Deepwater Horizon explosion in 2010, which killed 11 workers and led to the worst offshore spill in US history, and the Texas City refinery disaster in 2005, in which 15 workers were killed.

The PSA’s investigation into the Ula leak, the results of which were made public on Monday, identified “a number of serious breaches of the regulations, related in part to BP’s management system for activities” in Norway’s North Sea oil and gas fields. The PSA issued BP with an order to review its systems.

After the 2011 fire on the Valhall installation, BP was also served with similar orders to review and assess its “maintenance management on ageing installations and ensuring that maintenance programmes and the execution of such work were tailored to the age and condition of the installations and equipment”.

But even after those reviews, from its investigation of the Ula incident, the PSA has concluded that “deficiencies still exist in the maintenance system”.

The PSA said an order of the type issued to BP was “a powerful preventive measure and legally binding on the recipient”.

BP said: “[We have] received the PSA’s investigation report following the hydrocarbon leakage on Ula last year. The findings closely match BP’s own investigation and work has already started to address the issues raised.”

The oil and gas leak at Ula was caused by “fracturing of the bolts holding together a valve in a separator outlet”, the PSA found. Seepage from the valve exposed the bolts to water with a high content of chlorides at a temperature of about 120C, resulting in stress corrosion cracking, which weakened the bolts to the extent that in the end they fractured.

Fiona Harvey


guardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

    

Be the first to comment - What do you think?
Posted by admin - April 29, 2013 at 18:37

Categories: News   Tags: , , ,

UK GDP highs and lows

Business services and car sales help to drive the economy higher, but agriculture and construction take a hammering

Bright spots

Car sales
Much of the economy’s unexpectedly strong performance came within the dominant services sector, with motor trades particularly strong. New car registrations in March were almost 6% higher than a year ago, according to the Society for Motor Manufacturers and Traders.

Business services
Another bright spot in the services sector was business services, such as consultancy and accountancy, with Britain’s army of lawyers faring particularly well in the first quarter. Output from the business services sector was 1.2% higher than a year earlier.

Government
Despite the Treasury’s plans for tightening the government’s purse strings, government and other services, which includes healthcare and education, for example, expanded by 0.5%, making a positive contribution to GDP growth.

North Sea oil and gas
Within the 0.2% rise in total production, there was a sharp 3.2% increase in “mining and quarrying” output over the quarter, which mainly resulted from a bounce-back in North Sea oil and gas production after a major facility was shut for maintenance at the end of 2012.

Gas and electricity
One predictable effect of the colder-than-average weather this year was that householders kept their heating turned up higher for longer, increasing output from the utilities sector by 0.5% over the quarter.

Economic weak spots

Manufacturing
Vince Cable and George Osborne hoped for a rebound in British industry to help build a more sustainable economy, but manufacturing declined by 0.3% in the first quarter and remains just 3% higher than during the depths of the recession in 2009.

Construction
The building sector has been hammered since 2008 by lack of demand from the public sector and the continuing weakness in the housing market. Construction output was down 2.5% over the quarter, according to the Office for National Statistics, its weakest performance since the start of 2012. Osborne’s £5.4bn help-to-buy scheme, announced in last month’s budget, is partly aimed at boosting housebuilding with loans to buyers and guarantees on mortgages. The ONS said new work for builders in January and February, excluding infrastructure projects, was at its lowest level since monthly records began.

Agriculture
The coldest March in 50 years resulted in a tough period for Britain’s farmers. Production declined by 3.7% in the first quarter, though these days it accounts for such a small share of the economy that it shaved only 0.02% off overall GDP.

Heather Stewart


guardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

Be the first to comment - What do you think?
Posted by admin - April 25, 2013 at 16:08

Categories: News   Tags: , , ,

North Sea oil fuelled the 80s boom, but it was, and remains, strangely invisible | Ian Jack

The peace and plenty of late-period Thatcherism owed more to oil than to ideology – but the benefits of that oil were never popularly acclaimed, or indeed much noticed

More than a quarter of a century ago, when it looked as though the sun would never set on Mrs Thatcher, I published a book called Before the Oil Ran Out. My children, who arrived later, would sometimes pick the book from a shelf and puzzle at the title and the dust jacket, which showed a white garden bench under a dark sky. What did it all mean? I couldn’t help at all with the cover image – it was striking but mysterious – but the title, too, defied an easy explanation. First, because the book contained few mentions of oil; second, because the past tense implied something historical while the subtitle, Britain 1977-86, suggested the present.

I had the idea for the title when I was walking through a London square around the time of the City’s deregulatory “Big Bang” and Peregrine Worsthorne coining the phrase “bourgeois triumphalism” to describe the brash behaviour of the newly enriched: the boys who wore red braces and swore long and loud in restaurants. Champagne was becoming an unexceptional drink. The miners had been beaten. A little terraced house in an ordinary bit of London would buy 7.5 similar houses in Bradford. In the seven years since 1979, jobs in manufacturing had declined from about seven million to around five million, and more than nine in every 10 of all jobs lost were located north of the diagonal between the Bristol channel and the Wash. And yet it was also true that more people owned more things – tumble dryers and deep freezers – than ever before, and that the average household’s disposable income in 1985 was more than 10% higher than it had been in the last days of Jim Callaghan‘s government.

Social peace had been bought by tax cuts and welfare benefits, and these had been largely enabled by government income from North Sea oil that by the mid-1980s was delivering the Treasury 10% of its revenues. The question was, how long would this bounty last? My estimate that by about 2010 Britain would “probably cease to be a significant producer of oil” was hopelessly wrong; present forecasts suggest reserves could last for another 30 to 40 years, depending on rates of exploitation and the success of new fields. On the other hand, revenues to the UK government are much less than they were – adjusted for inflation, receipts averaged more than £18bn a year in the 80s, compared to the £6.7bn estimated for the current year – and could of course, shrink much further if an independent Scotland won what the Scottish government considers its rightful share of the oilfields. It seemed at the time that the peace and plenty of late-period Thatcherism was a temporary phenomenon owing more to oil than to ideology – the book’s title implied an era that would soon be historic.

The idea wasn’t original. Economic journalists such as the Observer’s Bill Keegan keenly promoted the argument, and in 1987 even Tony Blair felt able to say that North Sea oil was “utterly essential to Mrs Thatcher’s electoral success”. And yet the benefits of North Sea oil were never popularly acclaimed, or indeed much noticed. We didn’t look at our disability allowances or wage slips and attribute any increase to men in hard hats far out to sea. Ditto with any moderation of deficits in the balance of trade. To adapt George Orwell’s famous passage on coalminers, we didn’t understand that all of us (“you and I and the editor of the Times Lit. Supp., and the Nancy poets and the Archbishop of Canterbury … “) really owed the comparative decency of our lives to poor drudges blackened to their eyes in mud, fitting drill bits on storm-lashed metal platforms 200 miles from the Scottish coast. They never came into it.

There were reasons for this. No politician has ever been keen to publicise luck as the source of national wellbeing – it takes away so much of their raison d’etre – and luck plays an especially big part in dictating how near a tribe, a village or a country lies to a workable carbon deposit. The emirs of the Persian Gulf were lucky, as in an earlier age were the large number of British landowners (Lord Elgin, the Dukes of Hamilton, etc) who discovered that they lived above coal seams. Still, whatever the happenstance of their location, we knew about coalminers because they lived together in communities and because pyramids of colliery waste marked the skyline in many parts of Britain, including unexpected places such as Somerset and Kent. Oil-platform workers, in contrast, have homes scattered across the UK and come together only on the helicopters flying them out to workplaces that civilians will never see with the naked eye, unless they sail in fishing boats. Also, with wages averaging £64,000 a year, they are too well paid to be pitiable.

But the chief cause of the industry’s invisibility at its 1980s height was surely that Britain had become increasingly London-focused, and regarded any kind of manufacturing or extractive industry as “northern” and old-fashioned. According to the historian Christopher Harvie, the country had seen no greater civilian project since navvies built 5,000 miles of railway in the late 1840s; the North Sea’s story of underwater exploration and daring engineering would have thrilled earlier generations. Instead, Harvey writes, “the impact of oil on the British metropolitan intelligentsia and its imagination was practically zero”. In Scotland, where oil had immediate political, environmental and social repercussions, journalists took a greater interest, but even there the emblematic figure of that decade was the aforementioned shouty boy from a bank rather than a roustabout on the train home from Aberdeen, taking advantage of the buffet car after his teetotal stay at sea.

Oil’s failure to intrude into the public debate, particularly in southern Britain, had an important consequence. “Not fixing the roof while the sun shone”, the favourite Tory accusation against the Blair/Brown regime, held true in spades for the way oil receipts were spent in the Thatcher years. Other countries – Norway is the leading example – used their tax on oil to modernise infrastructure and industry, or hoarded some of it in a sovereign wealth fund for the proverbial rainy day. Instead the Treasury used every last pound of it to set against current expenditure, leaving nothing for capital projects or the post-Thatcher future. No roofs were fixed: in this respect, Mrs Thatcher as the prudent housewife is a piece of make-believe.

Oil inflated sterling’s value in the 80s, destroying exports and industries, and some analysts believed that only when it ran out and sterling declined could Britain flourish again as a trading nation; the running-out would be a cloud with silver lining. “But,” as I wrote in my strangely named book, “given the lack of industrial investment during Britain’s peak oil years, it is difficult to see what will provide our living.” There are many sentences in the book I never want to read again – rereading can be a painful experience. But that one at least has the comfort of rightness. Neither Big Oil nor the Big Bang has saved us – what will, O Lord, what will?

Ian Jack


guardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

    



Be the first to comment - What do you think?
Posted by admin - April 19, 2013 at 17:15

Categories: News   Tags: , , ,

North Sea oil fuelled the 80s boom, but it was, and remains, strangely invisible | Ian Jack

The peace and plenty of late-period Thatcherism owed more to oil than to ideology – but the benefits of that oil were never popularly acclaimed, or indeed much noticed

More than a quarter of a century ago, when it looked as though the sun would never set on Mrs Thatcher, I published a book called Before the Oil Ran Out. My children, who arrived later, would sometimes pick the book from a shelf and puzzle at the title and the dust jacket, which showed a white garden bench under a dark sky. What did it all mean? I couldn’t help at all with the cover image – it was striking but mysterious – but the title, too, defied an easy explanation. First, because the book contained few mentions of oil; second, because the past tense implied something historical while the subtitle, Britain 1977-86, suggested the present.

I had the idea for the title when I was walking through a London square around the time of the City’s deregulatory “Big Bang” and Peregrine Worsthorne coining the phrase “bourgeois triumphalism” to describe the brash behaviour of the newly enriched: the boys who wore red braces and swore long and loud in restaurants. Champagne was becoming an unexceptional drink. The miners had been beaten. A little terraced house in an ordinary bit of London would buy 7.5 similar houses in Bradford. In the seven years since 1979, jobs in manufacturing had declined from about seven million to around five million, and more than nine in every 10 of all jobs lost were located north of the diagonal between the Bristol channel and the Wash. And yet it was also true that more people owned more things – tumble dryers and deep freezers – than ever before, and that the average household’s disposable income in 1985 was more than 10% higher than it had been in the last days of Jim Callaghan‘s government.

Social peace had been bought by tax cuts and welfare benefits, and these had been largely enabled by government income from North Sea oil that by the mid-1980s was delivering the Treasury 10% of its revenues. The question was, how long would this bounty last? My estimate that by about 2010 Britain would “probably cease to be a significant producer of oil” was hopelessly wrong; present forecasts suggest reserves could last for another 30 to 40 years, depending on rates of exploitation and the success of new fields. On the other hand, revenues to the UK government are much less than they were – adjusted for inflation, receipts averaged more than £18bn a year in the 80s, compared to the £6.7bn estimated for the current year – and could of course, shrink much further if an independent Scotland won what the Scottish government considers its rightful share of the oilfields. It seemed at the time that the peace and plenty of late-period Thatcherism was a temporary phenomenon owing more to oil than to ideology – the book’s title implied an era that would soon be historic.

The idea wasn’t original. Economic journalists such as the Observer’s Bill Keegan keenly promoted the argument, and in 1987 even Tony Blair felt able to say that North Sea oil was “utterly essential to Mrs Thatcher’s electoral success”. And yet the benefits of North Sea oil were never popularly acclaimed, or indeed much noticed. We didn’t look at our disability allowances or wage slips and attribute any increase to men in hard hats far out to sea. Ditto with any moderation of deficits in the balance of trade. To adapt George Orwell’s famous passage on coalminers, we didn’t understand that all of us (“you and I and the editor of the Times Lit. Supp., and the Nancy poets and the Archbishop of Canterbury … “) really owed the comparative decency of our lives to poor drudges blackened to their eyes in mud, fitting drill bits on storm-lashed metal platforms 200 miles from the Scottish coast. They never came into it.

There were reasons for this. No politician has ever been keen to publicise luck as the source of national wellbeing – it takes away so much of their raison d’etre – and luck plays an especially big part in dictating how near a tribe, a village or a country lies to a workable carbon deposit. The emirs of the Persian Gulf were lucky, as in an earlier age were the large number of British landowners (Lord Elgin, the Dukes of Hamilton, etc) who discovered that they lived above coal seams. Still, whatever the happenstance of their location, we knew about coalminers because they lived together in communities and because pyramids of colliery waste marked the skyline in many parts of Britain, including unexpected places such as Somerset and Kent. Oil-platform workers, in contrast, have homes scattered across the UK and come together only on the helicopters flying them out to workplaces that civilians will never see with the naked eye, unless they sail in fishing boats. Also, with wages averaging £64,000 a year, they are too well paid to be pitiable.

But the chief cause of the industry’s invisibility at its 1980s height was surely that Britain had become increasingly London-focused, and regarded any kind of manufacturing or extractive industry as “northern” and old-fashioned. According to the historian Christopher Harvie, the country had seen no greater civilian project since navvies built 5,000 miles of railway in the late 1840s; the North Sea’s story of underwater exploration and daring engineering would have thrilled earlier generations. Instead, Harvey writes, “the impact of oil on the British metropolitan intelligentsia and its imagination was practically zero”. In Scotland, where oil had immediate political, environmental and social repercussions, journalists took a greater interest, but even there the emblematic figure of that decade was the aforementioned shouty boy from a bank rather than a roustabout on the train home from Aberdeen, taking advantage of the buffet car after his teetotal stay at sea.

Oil’s failure to intrude into the public debate, particularly in southern Britain, had an important consequence. “Not fixing the roof while the sun shone”, the favourite Tory accusation against the Blair/Brown regime, held true in spades for the way oil receipts were spent in the Thatcher years. Other countries – Norway is the leading example – used their tax on oil to modernise infrastructure and industry, or hoarded some of it in a sovereign wealth fund for the proverbial rainy day. Instead the Treasury used every last pound of it to set against current expenditure, leaving nothing for capital projects or the post-Thatcher future. No roofs were fixed: in this respect, Mrs Thatcher as the prudent housewife is a piece of make-believe.

Oil inflated sterling’s value in the 80s, destroying exports and industries, and some analysts believed that only when it ran out and sterling declined could Britain flourish again as a trading nation; the running-out would be a cloud with silver lining. “But,” as I wrote in my strangely named book, “given the lack of industrial investment during Britain’s peak oil years, it is difficult to see what will provide our living.” There are many sentences in the book I never want to read again – rereading can be a painful experience. But that one at least has the comfort of rightness. Neither Big Oil nor the Big Bang has saved us – what will, O Lord, what will?

Ian Jack


guardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

    



Be the first to comment - What do you think?
Posted by admin -  at 17:15

Categories: News   Tags: , , ,

Letters: Coal, dole and wasted North Sea oil

In this media frenzy surrounding Thatcher’s death (Report, 10 April), we feel it has been forgotten that after the 1984-85 miners’ strike, she started to close coalmines on a grand scale. We now import 40-50m tonnes of coal per year, which generate 50% of the electricity we used in the winter of 2012. This purchase from other countries is detrimental to our balance of payments and also means the people of this country are paying through their energy bills to keep miners in other countries mining, when we stand on an island of coal and our miners, the few that are left, are losing their jobs.

Germany is now desperately building 20 new coal-fired power stations in the hope of keeping its lights on. The first one opened in September 2012 and is producing 2,200 MW of electricity, nearly as much as the average output of all Britain’s wind farms combined. China is planning to build 363 coal-fired stations; India is ready to build 455. Australia is producing and exporting coal at a phenomenal rate, all over the world. Why is it that Britain is no longer producing clean coal to generate electricity – the answer is Thatcher’s pit closure programme, which also shut down the research into clean coal, which was well advanced at the time.

She called the miners in 1984 “the enemy within”, when we were just defending our communities from her draconian pit closure programme. We are still suffering the effects, with widespread unemployment among our young people, many of whom have lost hope. She is portrayed as a British patriot, but the result of her privatisation policies are that all our energy companies are owned by overseas firms, which have just made massive profits and taken them abroad. This is Margaret Thatcher’s true legacy.
Eric Eaton, chair, Ann Donlan, secretary
Nottinghamshire NUM Ex and Retired Miners Association

•?After producing coal for over a century, the men of Maltby colliery worked their last shift on 28 March. On 6 April the proud people of Maltby marched behind the colliery band from the pithead to the village cemetery. A lump recently dug coal was buried by the grave of the unknown miner, one of 23 killed in an underground explosion in 1923. This moving, dignified ceremony was a fitting tribute to the men who had worked at the mine, of which many had developed diseases as a result and are buried in the surrounding graves.

The name Thatcher has cast a pall over mining communities such as Maltby and her name has been seared into the consciousness of the people since the miners’ strike. Thatcher’s death has unleashed a rightwing, eulogistic media glorification of her that will culminate in her ceremonial funeral at St Paul’s. I for one will be giving this a miss and spend the day watching footage of “Maltby’s last stand” because it represents the pride, dignity and the endurance of community spirit of the Thatcher years.
Michael Wolverson
Cottingham, East Yorkshire

•?One simple measure of Thatcher’s legacy is the number of deep coal mines remaining: three, compared with 223 when Thatcher was elected. So many communities devastated, jobs lost and an energy resource thrown away. How different it could have been had the North Sea oil and gas bonanza been used differently, rather than spent on mass unemployment and industrial destruction. How can Britain pay its way in the world now? We’re a country with deregulated and rich but failing bankers and deregulated low-paid workers, more reminiscent of the days of real Victorian holes in the ground.
Dave Feickert
Former national research officer, NUM

•?Norway also had a North Sea oil boom at the same time as we did. They created a sovereign wealth fund that has ensured investment in secure pensions as the population ages and they invested in secure renewable energy on a staggering scale – 98% of their energy requirements (other than transport) comes from hydro power. What did we get? Tax cuts for the rich, the destruction of our manufacturing sector, a pensions bill that we don’t know how to pay and threats that our electricity generation soon will not meet demand. That is the measure of the utter failure of the Thatcher project.
Pam Lunn
Kenilworth, Warwickshire


guardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

1 comment - What do you think?
Posted by admin - April 10, 2013 at 21:00

Categories: News   Tags: , , ,

Friends of the Earth says George Osborne creating ‘bonanza’ for oil firms

Tax breaks worth almost £1bn lead FoE to accuse the chancellor of ‘bending over backwards to help the big oil barons’

Friends of the Earth has accused George Osborne of creating a bonanza for Britain’s big energy companies by providing almost £1bn of tax breaks designed to boost North Sea oil and gas production.

FoE said the chancellor was going against the advice of Jim Yong Kim, the president of the World Bank, in providing subsidies designed to ensure “every last drop of oil” is extracted from the UK’s rapidly declining reserves.

It said Osborne had hugely expanded field allowances, introduced by Alistair Darling in 2009 to encourage production from “small or technically challenging new fields”. These were worth £300m to the sector over the past three years.

David Powell, FoE’s economics campaigner, said in the current financial year new field allowances had been created and an existing one expanded. As a result, tax breaks since the 2012 budget were worth £864m to the industry and were likely to rise further as a result of the field allowance to Dana Petroleum for its $1.6bn oil and gas development east of Shetland, announced in late 2012.

“With almost £1bn of tax breaks lavished upon them this financial year alone, it’s bonanza time for dirty gas and oil,” Powell said. “George Osborne is bending over backwards to help the big oil barons, but getting him to support renewable energy is like trying to squeeze blood from a stone.”

North Sea oil production has fallen sharply since the 1990s, but the high price of oil on global markets has made uneconomic oilfields commercially viable. The tax breaks exempt the industry from a certain amount of tax from particular fields, helping to offset the £2bn-a-year supplementary charge that Osborne imposed, to the fury of oil and gas companies, in his 2011 budget.

A Treasury spokeswoman said: “The government’s package of changes to the oil and gas tax regime is expected to stimulate billions of pounds of investment, supporting jobs, delivering revenue for taxpayers and helping ensure we make the most of this valuable national asset. The changes should be considered in the context of the oil and gas tax regime as a whole, including the supplementary charge, which was increased at budget 2011.”

Oil and gas revenues were more than £11bn in 2011-12, but are expected to decline to £4.5bn by 2017-18.

Powell said Osborne was using tax breaks to “stimulate harmful activity” regardless of the amount it brought in to the exchequer. The Treasury had already placated the industry by promising to legislate for a fixed rate of tax relief on decommissioning oil and gas rigs, he said, something for which North Sea producers had long been lobbying.

“While the chancellor thrashes around desperately for another fossil fuel fix, the real long-term solution to our economic crisis lies in ending our gas and oil addiction and exploiting the UK’s huge clean energy potential,” he said.


guardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

Be the first to comment - What do you think?
Posted by admin - February 4, 2013 at 19:09

Categories: News   Tags: , , ,

George Osborne on course to miss borrowing targets by £13bn, say experts

Institute for Fiscal Studies says chancellor’s hopes of small cut in budget deficit will be dashed if trends continue

Britain’s leading experts on tax and spending have warned George Osborne that weak tax receipts from the struggling economy have left him on course to miss his borrowing target by £13bn this year.

Adding to the pressure on the chancellor in advance of his autumn statement on 5 December, the Institute for Fiscal Studies (IFS) said government hopes of a small cut in the budget deficit would be dashed if the trend in the first seven months of 2012-13 continued for the rest of the year.

City analysts said news that borrowing in October was £2.7bn higher than in the same month of 2011 made it more likely that Osborne would fail to meet at least one of the two fiscal rules he announced when he became chancellor in May 2010.

But analysts said they expected the chancellor to push back the deadline for reducing Britain’s debt as a proportion of national output by one or two years rather than risk stifling growth with fresh austerity measures.

Labour said data from the Office for National Statistics showing that borrowing in the first seven months of the 2012-13 financial year was £73.3bn – £5bn higher than in the same period of 2011-12 – illustrated the failure of the government’s strategy.

Rachel Reeves, the shadow chief secretary to the Treasury, said: “George Osborne is borrowing billions more simply to pay for the cost of his economic failure. Having failed on jobs and growth, the government is now failing on the deficit too with government borrowing so far this year up by £5bn – a rise of 7.4%.

“With long-term unemployment rising and our economy flatlining, the welfare bill is now soaring while business tax receipts are down. By squeezing families and businesses too hard, choking off the recovery and so pushing borrowing up not down, the government’s economic plan has completely backfired.”

The Treasury said the latest figures showed that spending was under control, with most of the fall in tax receipts the result of production cutbacks in the North Sea. A spokesman said: “The economy is healing, but it still faces many challenges. These numbers illustrate that, but also show the government’s plans to bring spending under control are on track for the year.”

The autumn statement will be influenced by the judgments made by the independent Office for Budget Responsibility (OBR) on how the economy’s future growth prospects will affect the public finances. Osborne has two fiscal rules – to start reducing debt as a share of GDP by 2015-16 and to ensure that by the end of a rolling five-year period the government balances its non-infrastructure budget after allowance for the state of the economy. The OBR said its forecasts at the time of the March budget implied a £1.5bn fall in government borrowing for the full financial year.

Rowena Crawford, a senior research economist at the IFS, said: “Today’s figures will likely result in an unpleasant feeling of deja vu for the chancellor as he prepares for next month’s autumn statement. As was the case last year, a worse-than-expected decline in corporation tax receipts in October has contributed to an overall picture of lower-than-expected growth in revenues so far this year. Spending on the administration and delivery of public services has also again grown more slowly so far than forecast for the year as a whole.

“Last year the level of underspending was sufficient to offset the lower-than-forecast growth in revenues at this point in the year, leaving borrowing looking broadly on course to meet the previous forecast. However, this year the potential spending undershoot looks to be able to offset only partially the weaker-than-expected receipts. If the trends in central government receipts and non-investment spending were to continue for the remainder of 2012-13, borrowing would come in £13bn higher than forecast by the Office for Budget Responsibility in March.”

David Tinsley, UK economist at BNP Paribas, said: “In the short run the economy probably needs less austerity rather than more and the best approach in the autumn statement is for the chancellor to take the weakening in borrowing on the chin and emphasise that medium-term spending restraint appears to be working.”


guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

Be the first to comment - What do you think?
Posted by admin - November 21, 2012 at 23:03

Categories: News   Tags: , , ,

North Sea tax break expected to create thousands of jobs

Canadian-based Talisman Energy among operators expected to spend billions investing in North Sea oil projects

Talisman Energy has unveiled plans to spend £1.6bn on a new North Sea project that it says will create 2,000 jobs on the back of government tax breaks to the oil industry.

Further billion-pound schemes are in the pipeline by other operators, according to the lobby group Oil & Gas UK, although some of the spending is likely to go to foreign contractors.

Canadian-based Talisman said the investment in the Montrose field was by far the biggest it had made in its near 20-year history although it declined to say how much the tax arrangements were worth. Nor would the company say exactly how many contracts would go to British firms as opposed to Dutch and Spanish contractors that are queueing up to bid.

“We have to abide by competition laws and our own rigorous internal vetting procedures but we are mindful of UK suppliers and will use them wherever possible,” said Geoff Holmes, senior vice president of Talisman.

He said that a first major contract for a UK company worth more than £50m has been awarded to Tyneside-based Offshore Group Newcastle for engineering work.

Talisman previously said that it could not go ahead with Montrose without extra tax breaks on top of the small fields allowance. It referred questions on tax to the Treasury.

A spokesman at the government department said it was not in a position to reveal these details although sources there said the tax allowances were carefully calibrated to ensure tax payers ultimately benefited from higher oil revenues.

Treasury minister Sajid Javid said the news is further evidence that the government’s efforts to stimulate investment in the North Sea are paying dividends. “By creating tax allowances that allow us to get the most out of this vital national resource, we are supporting skilled job creation – including more than 2,000 new posts as a result of the Talisman project. This is good news not just for the north east of Scotland, but the whole of the UK.”

The Montrose Area Redevelopment (MAR) will bring two smaller fields, Cayley and Shaw, on stream to eventually produce 36,000 barrels a day. The new output will start in 2016 from reservoirs containing 100m barrels of extra reserves and the crude will be pumped ashore via the Montrose platform which was originally put in place over 35 years ago.

The government unveiled a “brown field” tax allowance last month after a long period of lobbying from an industry that has seen drilling levels plunge despite high oil prices.

John Hayes, the energy minister, said the Talisman move marked the start of a new wave of interest in North Sea oil.


guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

Be the first to comment - What do you think?
Posted by admin - October 24, 2012 at 23:06

Categories: News   Tags: , , ,

We need a vision for energy – not this fiasco | Observer editorial

Electricity and gas users deserve bettter than rising bills and governmental cock-ups

This weekend, David Cameron is a man at bay, beset by critics who claim that the dramatic resignation of his chief whip strengthens the impression of a gulf between the privileged background and elitist sentiments of the prime minister’s entourage and the vast majority of ordinary Britons. The farcical scenes that surrounded his chancellor’s train journey to London in a first-class compartment seemed to add a dash of colour to this picture.

But it was the events of last Wednesday, when Mr Cameron appeared to be making energy policy up on the hoof – telling the House of Commons that he would make power suppliers offer the cheapest rates to all consumers – that might prove to be most damaging to his claim to that most vital prime ministerial asset: competence.

It would be tempting to think this gaffe was just a manifestation of the growing political pressure on him to tackle the major power companies on profiteering while redeveloping policy for a lower carbon future – in double-quick time. But the urgency is really the culmination, not of months or even years, but decades of inaction in a country that has taken energy supply for granted due to the geological fortune of North Sea oil and gas.

Margaret Thatcher was talking about the threat of climate change in 1988 although she did nothing much about it while rushing for hydrocarbons largely as a tool to shut down mines and neutralise powerful trade unions. Meanwhile, the seabed fortune was squandered by a succession of governments. Where is the trillion-pound sovereign wealth fund that could be invested in green technologies or even just provide cash for future generations?

Worse than this, no one prepared for the inevitable rundown in North Sea oil and gas, leaving the UK increasingly dependent on high-cost imports. This decline in local supplies has come at a time when the coalition increasingly sees gas as the energy source of the future because it can heat homes and be burned in power stations.

Coal, nuclear and gas have traditionally been the fuels of choice for the wholesale power companies but tough new environmental regulations and old age are leading to a fast phase-out of the first two. Meanwhile, efforts to usher in a new era of lower-carbon electricity generation from renewables such as wind and solar plus new nuclear plants have been characterised by ministerial dithering, mixing prejudice with practical concerns.

The development of onshore wind has been set back by planning objections while offshore farms have been dogged by rows over the high level of subsidies. Progress has been made with new projects and an enormous amount of work is going on to reduce costs of wind-generated power but even so the renewable sector was always going to produce – at most – just 30% of all electricity by 2020. Nuclear, which once provided nearly a quarter of our electricity and now is down to little more than 10%, remains stuck in a financial rut of its own.

Many of the foreign power companies that originally championed new UK atomic plants, such as RWE and E.ON of Germany, have decided to leave the market, while EDF, the main cheerleader, has found its enthusiasm dented by a new and less sympathetic government on its home patch, France. EDF is now badgering for the highest possible financial incentives before agreeing to go ahead with its first planned station at Hinkley Point.

It may yet get what it wants, but the chances of the once-vaunted nuclear renaissance in Britain seems pretty much dead for an international industry undermined by the aftermath of the Fukushima disaster and huge cost overruns at other new nuclear projects.

We will learn on Tuesday about the prospects for UK atomic new-build when the Energy and Climate Change Committee meets. Similarly, we will hear on 5 November the government’s wider vision of how it will keep the lights burning through the final version of the energy bill and, in particular, its details on electrical market reform. This document is meant to show how Britain can provide itself with power, encourage even more lower-carbon generation and keep energy bills down at a time when fuel poverty is growing.

How this will be achieved is a mystery as we have seen contradictory messages from a Conservative-dominated and renewable-sceptical Treasury versus a Lib Dem-influenced and low-carbon-facing Department of Energy and Climate Change. For good measure, the commercial community is also divided. A minority of manufacturing leaders believe Britain must embrace a new low-carbon future while a short-termist majority fear only that low-carbon initiatives could drive up costs.

And while this struggle to come up with a meaningful and final energy bill goes on, power companies have continued to infuriate consumers and politicians with a succession of domestic price increases. The energy suppliers say they are covering rises in international gas costs and need cash to invest in lower-carbon options. However, like the bank industry before them, their credibility is shot. This is the sector that has been fined for mis-selling products, introduced hugely complicated tariff structures and has shown an ability to raise retail prices quickly in poor times for the market while demonstrating a remarkable laxity in lowering them when markets improve. Their spokesperson as chief executive of Energy UK is Angela Knight, until recently the chief executive of the British Bankers’ Association.

Not that long experience in the energy sector counts for much. Alistair Buchanan, the boss of regulator Ofgem, has been given the runaround by the power companies and has failed to curb their excesses until too late. On Friday, he unveiled plans to force suppliers to tell householders about their cheapest deals but this was a good deal softer than Cameron’s initiative at parliamentary questions, which we are assured has been “misunderstood”.

The real misunderstandings have come from governments (not just this one) failing to grasp the need for an energy policy that looks ahead 30 years and does not leave it all to a market driven by short-term considerations. We need energy ministers who stay in post for more than a dozen months. We need to build low-carbon technology champions. We need an Olympian vision, not a Cameron cock-up.


guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds





Be the first to comment - What do you think?
Posted by admin - October 21, 2012 at 09:03

Categories: News   Tags: , , ,

Energy: We must mix to match future demands in Britain

We have to make decisions now that are good for consumers, energy security and the environment

Energy is vital for our everyday needs, it is one of the largest household costs, it is core to our economic recovery – but rarely has it been the focus of political and media attention.

Straight after the 2010 election, David Cameron came to the department of energy and climate change to set our mission. We had to deliver new investment to keep the lights on, we had to respond to consumers’ concerns about prices and, of course, we had to be the greenest government ever.

It was a mission that showed the prime minister “got” energy. He knew that you can’t have energy security without renewables, that you can’t keep the lights on without a step change in investment, but that there are limits to what consumers would, or could, pay. For the first time in years, the UK would have an energy policy.

That meant getting away from the sterile debate that you were only pro-consumer if you were against the energy companies and vice versa. The reality is different. As old plants close, we need twice as much investment in replacement plants this decade as Labour achieved in the last. Drive investors away and in a few years supply won’t meet demand, forcing prices up and businesses into shutdown.

The government rightly acted to reduce demand with better insulation and the green deal. But that cannot help most people struggling to pay their bills today, so the prime minister is right that more needs to be done to get consumers the best deal.

However, we should also use this moment for an honest debate about how we pay for our future energy needs. In recent years, UK electricity and gas prices have been some of the cheapest in the EU because we had an abundant supply of our own gas and because, frankly, not enough was being spent to build new power stations. So we have to catch up now for that failure to invest over many years.

It also goes to the heart of decisions about what sources of energy we use.As a minister, I recognised the continuing need for gas. Indeed, I approved more gas power stations and encouraged more licence applications for the North Sea than any previous minister.

But our future can’t depend on gas alone. Shale gas can make a contribution (although not without community backlashes, I suspect), but cannot bring the UK the same benefits as in America, where consents are much easier and prices are kept artificially low by the lack of export facilities. As the International Energy Agency says, we may face a golden age for gas, but don’t assume it will be cheap. Last year’s energy price rises owed more to rising global wholesale gas prices than anything else, so betting the farm on shale brings serious risks of future price rises.

Energy security can only be delivered with a mix of technologies. New nuclear helps to give energy independence. Renewables harness the exceptional resources of these islands. Carbon capture and storage creates long-term opportunities for coal and gas. But no single source is fully secure.

Harnessing our low-carbon potential isn’t just right environmentally, but it is a central plank of energy security. If the world’s major oil and gas economies, such as Saudi Arabia and Norway, want to use low-carbon sources themselves, it has to be right for us too.

But there isn’t much time left. Decisions on where to invest are being made now. Uncertainty and hostility would undermine the UK’s ability to secure the jobs and economic benefits from the supply chain for those new power plants. And if those companies walk away from the UK, it is a permanent loss and we all pay the price.

The prime minister set a clear energy strategy two years ago. Much has been done to deliver the right mechanisms. This is our chance for a win-win-win outcome, an outcome that is good for energy security, for the environment and for consumers. Now we need to get on with it.

Charles Hendry was minister of state for energy and climate change 2010-2012.


guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds





Be the first to comment - What do you think?
Posted by admin -  at 09:02

Categories: News   Tags: , , ,

Next Page »