Budget 2017: Tax changes could breath new life into East Anglia’s gas industry
East Anglia's oil and gas industry could receive a 'new lease of life' after the chancellor announced measures to make it easier for companies to exchange late-life assets.
Philip Hammond revealed the plan during his Autumn Budget and also said the government would launch a technical consultation on allowing a petrol revenue tax deduction for decommissioning costs incurred by a previous licence holder of an asset.
Industry experts are hopeful the move could stimulate business in the southern North Sea (SNS) by encouraging smaller operators and owners to buy gas production facilities and rights off the major companies.
Prior to this the history of tax paid remained with the asset's original owner, even if it changed hands, despite the tax paid having a bearing on final decommissioning costs when the asset comes to the end of its productive life.
Simon Gray, chief executive of the East of England Energy Group (EEEGR), said: 'I think it will help attract potential new operators and owners to the market, driving the industry forward.
You may also want to watch:
'It will help stimulate the marketplace – we have also seen a slight rise in the gas price – and things are looking positive for the UK continental shelf as whole but the southern North Sea in particular.'
Mr Gray said that, alongside investment for the Third River Crossing at Great Yarmouth where many energy companies are based, the move would give a new lease of life to the region.
- 1 Bar splashes out £500,000 on outdoor dining area
- 2 Police action over 'slavery' flag flying in Norwich garden
- 3 Owners put Tudor mansion wedding venue up for sale for £3.9m
- 4 Former car showroom could make way for 146 student flats
- 5 Former pubs, schools and leisure centres among arson-hit sites
- 6 'It was divine' - Why this seafood platter is receiving rave reviews online
- 7 Why teacher was right to report Confederate flag to police
- 8 Boss who boasted of lavish lifestyle is bankrupt with £100k debts
- 9 'This is nature' - Sadness as cathedral peregrine chick dies
- 10 'Shocked' couple almost given wrong Covid jab
The government believes transferrable tax history could generate £5m in 2018/19 and £20m in 2019/20.
Oil & Gas UK analysis of 23 UK asset transfers since 2011 reveal that deals have extended field life by almost five years on average.
In April, Independent Oil and Gas bought a decommissioned pipeline for £1 – allowing it to access three satellite hubs in an SNS gas field.
Deirdre Michie, chief executive of Oil & Gas UK, said previously deals had been complicated and had generally been for less mature assets. She said: 'Prolonging the life of mature assets better allows the industry to deploy its skills and technology to maximise extraction of the UK's oil and gas, increasing production tax revenues to the exchequer and securing highly-skilled jobs.'