Total to proceed with Shetlands project

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Feb. 15 -- Total SA has advanced a decision to invest in two UK gas fields after the British government earlier this month introduced tax breaks to encourage development in the area west of the Shetland Islands.

Total’s director of North Sea operations Patrice de Vivies said he expected to sanction the development of the Laggan and Tormore gas fields, which will be brought on stream in March as a single project.

Total’s decision follows a recent announcement by the British government that it would give a £1 billion-plus tax boost to help to jumpstart production in remote gas fields west of the Shetland Islands.

“The legislation, if approved by the House, will extend the field allowance, announced in Budget 2009, to remote deepwater gas fields, which are found in the west of Shetland area,” said Chancellor of the Exchequer Alistair Darling (OGJ, Feb. 8, 2010, p. 28).

“Approval of the legislation will be sought no later than the end of March,” a Treasury spokesman said.

In December Total was holding talks with the British government on extending tax relief to its Laggan and Tormore fields in the west of Shetland region. Total said the fields could be brought on stream in 2014, depending on the tax break.

According to analyst BMI, Total has a “relatively large” exposure to the West of Shetland. It is the operator of the Laggan and Tormore fields with a 50% interest, alongside partners DONG Energy 20%, Eni SPA 20%, and Chevron Corp. 10%.

“Total forecasts output from Laggan-Tormore to be 90,000 b/d of condensate and 5.2 billion cu m/year of gas,” BMI said, adding that “This would be a massive boost to Total’s UK production, which has being falling steadily in recent years.”

BMI said Total’s liquids output has dropped from 135,000 b/d in 2005 to just 91,000 b/d in 2008, while over the same period its gas output has fallen to 6.7 billion cu m from 9.6 billion cu m.

Contact Eric Watkins at hippalus@yahoo.com.



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