Maersk Reaches Key North Sea Tax Deal with Denmark

Shipping and oil company A. P. Moller-Maersk 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, Chevron (CVX) 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The tax allowance will be withdrawn if the oil price rises to above $75 per barrel, the ministry said.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.

 

The deal will support investments of more than 10 billion Danish crowns ($1.5 billion) in oil and gas production in the North Sea, and could increase tax revenues by 26 billion crowns through 2042, the finance ministry said.


($1 = 6.8880 Danish crowns)

(By Teis Jensen; Additional reporting by Erik Matzen and Nikolaj Skydsgaard, editing by David Evans)