Ministers told case for cutting N. Sea oil tax is ‘compelling’, as Cairn Energy slashes jobs by 40%

Cairn EnergyCairn Energy has cut its global oil workforce by 40% across both staff and contractors, the Edinburgh-based fossil-fuel giant announced yesterday in a trading update ahead of its annual results.

The news came as UK and Scottish Energy ministers were told by leaders of the major oil and gas companies in the UK that the case for cutting N. Sea taxes – particularly while crude oil prices continued to slide southwards – is ‘compelling’.

Cairn did not provide any further details on its workforce re-organisation, other than to say it is ‘now complete’.

On a brighter note, howver, it said its Catcher and Kraken developments in the UK North Sea are on-track for first-oil in 2017. The first steel-cutting of the Catcher FPSO hull has commenced and development drilling is scheduled to start this summer following installation of the first phase of subsea drilling templates The Kraken development drilling is also scheduled to start this summer.

Simon Thomson, Chief Executive, Cairn Energy, said: “Our focus for 2015 is on delivering a multi well appraisal and exploration programme in Senegal, following our success in opening up this new Atlantic Margin basin last year. 

“The large acreage position in Senegal offers material near-term growth potential with numerous follow on prospects identified, and the Joint Venture is well positioned to benefit from the current reduction in industry costs.

“We are fully funded to deliver this exploration and appraisal programme – along with the Kraken and Catcher developments, which are on track for first oil in 2017.”

Meanwhile, Oil and Gas UK – which includes Cairn Energy as a member – last night said that the case for cutting N. Sea oil taxes is ‘compelling’.

Speaking after a meeting with UK Energy Minister, Matthew Hancock MP, the Secretary of State for Scotland, Alistair Carmichael MP, and Scottish Energy Minister, Fergus Ewing MSP, on the serious challenges that face the sector as a result of falling oil prices and high costs, and Oil and Gas spokesman said:

“With so much existing and future production and associated jobs and tax revenues at risk, we conveyed the urgency with which fiscal and regulatory change is required, alongside industry efforts to tackle costs and improve efficiency.

With oil prices now well below $50, we believe that the rationale for the abolition of special taxes, particularly the supplementary charge, is compelling.”

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