Centrica threatens to shut Morcambe gas field due to tax increase

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Centrica – owner of British Gas – threatens to shut South Morecambe gas field in the Irish Sea due to a tax increase.

The dispute between the government and energy firms is said to have provoked Centrica which threatens to shut South Morecambe field over the 12% tax increase on offshore drilling.

Centrica – which produces 6% of UK’s gas from Morecambe field – said it might be cheaper to buy supplies on the open market and ship them in from abroad rather than continue operating Morecambe with the increased tax regime.

A Centica spokesman said: “At these higher tax rates, Morecambe’s profitability can be marginal.  Accordingly, we may choose to buy gas for our customers in the wholesale markets in preference to restarting the field after planned maintenance.”

Chancellor George Osborne desinged his March budget to raise £2bn to fund a cut in fuel duty.  The Treasury said the increase was necessary and that the company would continue to make substantial profits.

Centrica argues it should not pay a tax being levied to help motorists as its gas production goes into power stations, not to fuel cars.

Centrica originally closed three fields in Morecambe Bay for 4 weeks of planned maintenance work.