Shares in oil giant ExxonMobil (XOM) were lower today as it gave both barrels to the British government over its “deliberate” policy to scupper North Sea production.
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Fife Finish
Paul Greenwood, chairman of ExxonMobil, was speaking just a day after the company announced it was closing an ethylene manufacturing plant in Fife, Scotland in February next year.
He told the BBC that there were four keys to success in his sector – a cheap and abundant supply of ethane, along with low-cost operations, good market prices for ethylene and a skilled workforce.
“I will be blunt – I have one of those keys to success in place, and that is a brilliant workforce. Two of those keys I deliberately do not have because of Government policy,” he said. “Take the ethane supply: you know what’s happening in the North Sea, we’ve had windfall taxes, we’ve had a ban on production licenses – I need cheap sources of abundant ethane and I do not have them, because the North Sea – because of Government policy – is declining rapidly and that ethane is increasingly high price.”
Tax Burden
He also blasted the UK government for the burden of CO2 taxes, of which it paid £20 million last year. “That will double in the next four or five years. My international competitors do not have those costs,” he said. “I also have to deal with high energy costs and those kind of things, so these are deliberate Government policies that are undermining us.”
The XOM share price has struggled this year as it copes with higher costs and volatility in oil prices – see below:
The closure of the Fife factory, which XOM opened in 1985, is expected after the company “considered various options to continue production and tested the market for a potential buyer”, Greenwood said.
Ethylene is the base material for the manufacturing of plastics used in food packaging, medical equipment and car parts.
Exxon also has co-ownership of a gas processing plant in Scotland and a petrochemical complex in England.
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