Chinese companies keen to explore gas off Isle of Man
Chinese companies have expressed an interest in securing exploration acreage to find gas in waters off the Isle of Man, the self-governing British Crown Dependency located between the United Kingdom and Ireland, said a senior government official.
Earlier this year the government of the island, located off the northwest coast of England, announced that it was planning to award a new round of petroleum exploration licences.
Steven Beevers, head of special projects in the department of economic development of the Isle of Man, said his administration was open to having partners in energy and other sectors from China.
“We will be licensing for gas exploration in August,” Beevers said. “We already have some Chinese companies interested in that.”
According to a report from BP Global, at least 2.5 billion cubic meters of gas within the Isle of Man’s 4,000 square kilometers of seabed have been detected, and the actual reserves could be up to 25 billion cu m. It could potentially generate around 6.23 billion pounds ($8.22 billion) of revenue if price stays stable, Beevers said.
He said that the island, known for its competitive offshore tax policy, had in recent years started to promote itself to the Chinese market, after having built up a reputation over the long term as an investment hub in the West. Current Chinese investment in the island, he said, accounts for around one-tenth of its total foreign investment.
Beevers added the Isle of Man was suitable for small and medium-sized companies.
“Companies can apply for government grants and equity support. We don’t charge company tax on profits, but in return we ask for employment. We can also provide equity participation and act as silent partners if that’s what you want,” Beevers said.
Chinese tech giant Huawei Technologies Co Ltd has been working with the Crown Dependency to set up 4G internet coverage there. Property developers eyeing the market in the UK, such as Reignwood Group, have also operated in the island, taking advantage of its beneficial offshore tax policy, according to Beevers.
Li Yongyuan, a lawyer in Yingke Law Firm, said that Chinese companies should be aware of local tax laws and regulations when operating in offshore hubs.
“Many companies investing in offshore hubs such as the Isle of Man want to reduce their tax costs, but they need to know not only the local laws, but also the bilateral or multilateral tax agreements the offshore areas have with other countries where their business operates.
“Without consulting professional law firms — especially the local ones — and not staying updated with the legal environment, those companies can unintentionally violate the laws.
“The Isle of Man is an autonomous area within the UK. It has inherited a large part of the British legal system. Chinese companies not familiar with local regulations, laws and the cultural environment may face risks caused by such ignorance.”
We can also provide equity participation and act as silent partners if that’s what you want.” Steven Beevers, head of special projects in the department of economic development of the Isle of Man