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Premier makes “world-class” oil find off Mexico

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UK independent exploration firm Premier Oil has announced a “world-class oil discovery” off the coast of Mexico.

The find, made with partners Talos Energy and Sierra Oil & Gas, came at the Zama-1 well, the first private offshore exploration well in Mexico’s history. Premier holds a 25% share in Block 7, where the well is located.

“We are delighted to be announcing this significant new oil discovery offshore Mexico,” said CEO Tony Durrant. “We have encountered a very substantial oil bearing interval which indicates over 1 billion barrels of oil in place, a commercial standalone development which adds materially to Premier’s portfolio of assets worldwide”

The find was made in 166 metres (546 feet) of water, around 60 kilometres (37 miles) offshore the industrial port of Dos Bocas.

“It is particularly pleasing that our strategy of focusing our exploration portfolio on high impact opportunities in proven but under-drilled basins has led to this world class discovery with our first well in Mexico,” said Durrant. “The oil discovered in the Zama-1 well is an extremely important event for Premier, the joint venture and for Mexico and we look forward to working with the government and our partners to realise the full potential of this exciting discovery.”

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No ‘rationalisation’ at Vauxhall, says Business Secretary

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UK Business Secretary Greg Clarke has claimed that GM-owned carmaker Vauxhall’s UK future is secure.

“There is some way to go in discussions between GM and PSA but I was reassured by GM’s intention, communicated to me, to build on the success of these operations rather than rationalise them,” he said having met General Motors president Dan Ammann amid reports of a sale of Vauxhall and Opel to the parent company of Peugeot and Citroen.

“We will continue to be in close contact with GM and PSA in the days and weeks ahead,” said Clark.

GM was more cautious in its announcement: “While we have no definitive news to report at this time, we can affirm that our objective in exploring opportunities with PSA Group is to build on the success of Opel Vauxhall and to put the business and the operations in the strongest possible position for the future. We look forward to engaging with our stakeholders as part of these ongoing discussions,” it said.

The proposed deal is facing union opposition and political uncertainty, with details of the plan still thin after news of takeover talks emerged earlier this week.

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Shell in major North Sea oilfield selloff

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Petrochemicals giant Shell has agreed to sell off a major tranche of its North Sea oilfield holdings to private-equity firm Chryasor in a deal valued at $3.8bn.

The deal, which is expected to close in the second half of the year, involves the sale of the Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block,  Greater Armada cluster, Everest, Lomond and Erskine holdings, plus a 10% stake in Schiehallion.

The holding to be sold represents 115 thousand barrels of oil equivalent per day (kboe/d), with the Shell’s total North Sea production last year coming in at 211 kboe/d. “Following completion, Shell will retain a significant, more focused and strengthened presence in the UK North Sea, with production from the Schiehallion redevelopment and Clair Ridge project expected to come onstream,” the company said in a statement.

“Shell has a long and proud history in the UK North Sea, to which we remain committed,” said the company’s upstream director, Andy Brown. “This deal complements the great strides we have made over the last two years in improving the competitiveness of our UK upstream business.

“We believe this deal is a vote of confidence in the UK North Sea and offers proof that the industry’s increasing competitiveness, and improvements to the fiscal and regulatory regime, are starting to produce positive results. It will deliver value to Shell, Chrysaor and the UK as a whole, enabling us to continue to strengthen and optimise our UK portfolio and providing a springboard for Chrysaor to bring new investment and growth into the basin.

“It also contributes to the UK’s goal of maximising economic recovery of oil and gas from the UK North Sea, which will continue to be a source of energy, and revenue, for the country for many years to come.”

The deal will see around 400 staff move from Shell to Chryasor in a deal that is subject to partner and regulatory approvals.

“This deal shows the clear momentum behind Shell’s global, value-driven $30bn divestment programme,” said CFO Simon Henry. “It builds on recent upstream divestments in the Gulf of Mexico and Canada. It is also consistent with Shell’s strategy to high-grade and simplify our portfolio following the acquisition of BG, to ensure the company represents a world-class investment case.

“Importantly, the value here represents a profit against the book values of the assets, and a breakeven oil price above that for the BG acquisition.”

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Four British power firms call for carbon tax extension

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Power generators call on government to maintain carbon tax until 2025

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LONDON, Sept 26 (Reuters) – Four British power generators have called on the government to maintain the country’s carbon tax until at least 2025, according to a letter seen by Reuters, putting them at odds with industrial groups who want it scrapped.

The carbon tax is paid by power generators for each tonne of carbon dioxide (CO2) they emit, and was frozen in 2014 at 18 pounds per tonne until 2021.

British chancellor Philip Hammond is expected to provide details on what will happen to the tax after 2021 in his autumn statement on Nov. 23.

Most British power companies support the carbon tax. Its cost is passed on to consumers through higher electricity bills, meaning companies with low-carbon generation such as nuclear or renewables can then benefit from the higher electricity prices.

“We are calling on the UK government … to maintain the carbon price floor beyond 2021, by keeping the carbon price support rate at least at its current level until 2025 to maintain secure and reliable energy supplies,” a spokesman for power generator SSE, one of the letter’s signatories said in an email on Monday.

The other signatories were Drax, Vitol owned VPI Immingham and Calon Energy.

Industrial groups have called for the government to abandon the tax, saying it has made electricity prices in Britain uncompetitive.

“The UK has some of the highest electricity wholesale prices in the EU and this is in large part due to the carbon price floor,” Richard Warren, senior energy and environment policy adviser at Britain’s manufacturers’ organization EEF, said in an email.

EEF estimates the carbon tax adds around 8-10 pounds per megawatt hour (MWh) to British wholesale power prices, which currently trade at around 40 pounds/MWh.

The power firms said the carbon tax encourages them to invest in low-carbon power generation and said it is central to the country’s efforts to meet its climate change goals.

But EEF’s Warren said the government already helps low-carbon investment though other schemes, such as its contracts-for-difference which provides a guaranteed price for electricity production.

Power generators pay the carbon tax on top of their obligations under the EU’s Emissions Trading System, which forces companies to surrender one carbon permit for every tonne of carbon dioxide (CO2) they emit.

Benchmark prices in the EU ETS have plummeted from around 30 euros a tonne in 2008 to below 5 euros, rendering them too cheap to encourage investment, the power firms said.

Britain has a legally binding target to cut its emissions by 80 percent on 1990 levels by 2050 and has embarked on electricity market reforms aimed at spurring investment in low-carbon nuclear and renewable power.

Britain also plans to phase out coal-fired power generation by 2025.

(Editing by Susan Fenton)

Copyright(c) Thomson Reuters 2016.