Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Maersk reaches key North Sea tax deal with Denmark

Published 22/03/2017, 19:32
© Reuters. A man walks past empty Maersk shipping containers at Peel Ports container terminal in Liverpool
SHEL
-
MAERSKb
-
CHN
-

By Teis Jensen

COPENHAGEN (Reuters) - Shipping and oil company A. P. Moller-Maersk (CO:MAERSKb) on Wednesday reached an agreement with the Danish state that means it will pay less tax on its North Sea oil and gas activities through 2025.

The deal, which has been under negotiation for months, makes it viable to redevelop the Tyra field through which 90 percent of Denmark's gas production is processed, and it is seen as crucial for the Danish company that is seeking to spin off its energy assets via a listing or merger.

Maersk and its partners in the Danish Underground Consortium (DUC) -- Shell (L:RDSa), Chevron (N:CXN) and state-owned Nordsofonden -- with whom it owns Tyra, will decide on the redevelopment of the field by the end of the year, Maersk said.

"We will now issue tenders and progress engineering work towards detailed plans in preparation of a final investment decision by end 2017," Maersk Oil's Chief Operating Officer, Martin Rune Pedersen said in a statement.

"Pending a final investment decision, production from Tyra is now expected to shut in December 2019 and restart in March 2022," Maersk Oil said.

The deal means the tax allowance on oil and gas production will be increased gradually over the next six years to 6.5 percent from 5 percent now, the finance ministry said.

The tax allowance will be withdrawn if the oil price rises to above $75 per barrel, the ministry said.

Tyra's platforms have sunk 5 metres since production began 30 years ago but Maersk has earlier said it would not be viable to redevelop it given the conditions offered by Denmark.

© Reuters. A man walks past empty Maersk shipping containers at Peel Ports container terminal in Liverpool

The deal will support investments of more than 10 billion Danish crowns (1.2 billion pounds) in oil and gas production in the North Sea, and could increase tax revenues by 26 billion crowns through 2042, the finance ministry said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.