Centrica: Gas Allowances Pave Way for Cygnus Project

British Gas parent company Centrica has welcomed a new shallow water gas field tax allowance by the British government, saying it will allow the company to exploit the potential of the Cygnus gas field.

The company says that as a result of the £500 million (GBP) tax breaks announced yesterday, it will be better able to maximise its assets in the North Sea. Particular among these are the Cygnus project which the company describes in a statement as "the largest gas discovery in the Southern North Sea for 25 years". 

Centrica said the announcement of the tax breaks for North Sea shallow water gas fields would enhance the economics of the Cygnus gas field, a field which could provide as much as 5 per cent of the UK's total gas production. The company says that a £1.4 billion investment is planned for the field to develop it to production.

"As the UK becomes increasingly dependent on imported gas, today’s announcement represents a significant boost to the UK’s long term energy security as well as creating much needed jobs," CEO of Centrica Sam Laidlaw said yesterday. "For Centrica, this is an extremely significant project as we look to unlock remaining gas in the North Sea, securing UK gas supplies for our customers."

The tax allowance which will help to further the Cygnus field was first announced yesterday by the British government. Under this allowance, companies producing from shallow water gas fields (fields that are shallower than 30 metres in depth) will pay less tax than previously. The tax allowance will see producers such as Centrica paying 30 per cent corporation tax on any income up to £500 million, thus exempting the companies from a usual supplementary 32 per cent tax. The additional 32 per cent tax will be payable on income above £500 million.