BP cuts spending after $US1.5bn tax slug

is considering slashing its spending on future oil developments in Alaska after
the US state slugged oil companies with a $1.5bn (£760m) tax increase.

Sarah Palin, the Alaska governor, last week signed fiscal reform which will
erode the value of BP’s huge operations in Alaska and could lead to the
cancellation or deferral of projects in the province.

‘The effect of (the tax increase) is likely to be reduced investment,’ Steve
Rinehart, a spokesman for BP in Alaska, told The Times. BP is currently
revising its 2008 Alaska budget. Last year, the company spent more than $US2bn
in the state, including capital expenditure of $US1.2bn.

In another blow to the oil industry,
this month retreated from pledges to spend $US1bn in Alaska and abandoned plans
to invest $300m in a small refinery to produce clean diesel for use by vehicles
in the Prudhoe Bay area.

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story in The Times

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