By Laurence Norman and James Herron
LONDON -- The British government, pressed for solutions to soaring fuel prices, said it will exempt about 30 existing North Sea crude-oil and natural-gas fields from some taxes and approved the development of two new North Sea oil fields, which could begin production in early 2009.
But the measures, announced as U.K. Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling met with U.K. oil-industry executives to explore ways to increase oil and gas production, seemed unlikely to significantly alter Britain's fuel-price problems.
The British government, like others in Europe, has come under fire in recent weeks from groups that are severely affected by high fuel prices. Tuesday, transport companies sent hundreds of trucks into London to protest high fuel prices, while French President President Nicolas Sarkozy urged countries in the European Union to consider capping fuel taxes.
The measures adopted by the British Wednesday will do little to ease those concerns.
Tax changes to certain North Sea production operations will allow new oil and gas fields to be carved from unprofitable parts of 30 existing fields. This potentially will add 20,000 barrels a day of new production at the fields' peak, the Department of Business, Enterprise and Regulatory Reform said in a statement.
U.K. oil fields produced about 1.5 million barrels of oil a day in 2007, according to government figures.
The 30 fields will be exempted from the Petroleum Revenue Tax, which is levied at 50% of cash flow after capital expenditures and operating costs on oil produced in the North Sea above a specific allowance for each field. It applies only to fields that received development consent before March 1993.
U.K. secretary of state for business, John Hutton, also gave approval to Petrofac /zigman2/quotes/202340229/delayed UK:PFC +0.78% Ltd. for the development of the West Don and Don Southwest fields in the North Sea. The two fields are expected to begin production in early 2009 and produce 50,000 barrels of oil a day at their peak.