Chancellor highlights importance of oil and gas industry
PUBLISHED: 17:24 21 March 2012
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Clear support for the oil and gas industry was shown in today’s budget as the chancellor said he was determined that Britain should extract the greatest amount of oil and gas reserves possible at a time of soaring global crude prices.
As well as introducing new allowences, including a £3bn new field allowence for large and deep fields, he said he would be ending the uncertainty over decommissioning tax relief that has hung over the industry for years by entering into a contractual approach.
East of England Energy Group chief executive John Best said: “What this emphasises is the impact that the oil and gas sector and the Southern North Sea in particular and gas sector plays in the overall economic security of UK plc.”
Industry body Oil & Gas UK today welcomed the Chancellor’s announcements of measures to provide certainty to the industry and stimulate investment in the UK’s oil and gas reserves. Chief executive, Malcolm Webb, said: “Oil & Gas UK is greatly encouraged by the package of tax measures announced by the Chancellor which together will result in tens of billions of pounds of additional investment to develop the UK’s economically important oil and gas reserves, all at no net cost to the Exchequer. The changes announced are the result of over a year of constructive, collaborative work and reflect the Treasury’s proper and considered approach to the industry’s proposals.
“The introduction of legislation to enable the Government to give the industry certainty on tax relief on decommissioning costs is a very significant step forward. The measure should delay decommissioning of oil and gas infrastructure, give rise over time to up to £40bn of extra investment and result in the recovery of an additional 1.7bn barrels of oil and gas. The Exchequer could receive an extra billion pounds of tax revenues in the first five years alone. Oil & Gas UK will engage strongly in the Treasury consultation over the coming months to help ensure that the details of the measure are established to best effect.
Mr Webb said: “We see today’s action by the Treasury as a turning point for the UK’s oil and gas industry – towards a more stable future fostered by constructive collaboration between the government and industry to ensure that the recovery of the country’s oil and gas resource is maximised. The Treasury’s recently established Fiscal Forum is an important part of that process and we look forward to continuing to play a positive role in this. The investment that will surely follow today’s announcements will drive growth in the economy, securing highly-skilled jobs, promoting advances in offshore technology, boosting tax revenues and reducing oil and gas imports.”