UK oil in deficit as Brown North Sea taxes bite

Britian will run a deficit on its oil trade for the second year in a row in 2007, dealing a blow to Chancellor Gordon Browns forecast of a return to surplus. The development will fuel fresh fears that Browns tax hikes on the industry mean that it is now in terminal decline.

Figures from the International Energy Agency (IEA), the worlds energy watchdog, show UK oil production will fall a significant 130,000 barrels per day (bpd) short of expected demand.
The new IEA figures, obtained by The Business, show UK production of 1.70m bpd for 2007, against total demand of 1.83m bpd. The IEA has calculated that the extra 120,000 bpd produced from the UKs new Buzzard field will effectively be wiped out because of a net decline of 117,000 bpd from other fields.

But the UK Offshore Operators Association (Ukooa) estimates there are 16-25bn barrels worth of oil and gas left to produce.

A Ukooa spokeswoman said: We’re a little more than half way through. The issue is whether we can attract the investment.

According to critics, this shows the foolishness of Gordon Browns decision to raise taxes on UK oil production in the 2006 budget, just as investment needs to be encouraged.

The Business