Tuesday 19 October 2004

Amicus Tax Plan is Recipe for North Sea Decline

Responding to calls by the trade union Amicus for Treasury to impose a tax on companies who fail to explore for new oil and gas in the North Sea, Mike Tholen, Economics and Commercial Director at the UK Offshore Operators Association (UKOOA), said:

"Amicus will not be able to produce a single company investing in the UK today, nor a single company that would like to invest in the UK, that will support their tax proposals.  Far from securing the future of the North Sea, Amicus would appear to be calling for a repeat of a failed recipe that has already been shown to cause a slowdown in investment.

"The industry is now recovering from two exceptionally disappointing years that followed the unexpected tax hit on oil and gas producers in 2002.  Investor confidence is returning to the North Sea as the tax regime is being seen to be more predictable, with evidence of more exploration wells being drilled this year, more field developments going ahead and demand for drilling rigs pushing up rates to their highest in two years, with five rigs being recommissioned this year to support the heightened activity.

"There are now also more new oil and gas fields being considered for development within the next 3 years than at this time last year, a significant number of them involving new smaller operators.

"Recent initiatives to encourage activity in fallow or dormant acreage are proving successful, as have been the new lower-cost licenses introduced by Government to stimulate fresh interest and exploration.  These have attracted particular interest from companies who are new to the UK.

"Established companies are active too.  Only today, Shell has announced that it has produced the first gas from the Goldeneye field in the Outer Moray Firth, a £300 million project which will provide around 3% of the UKs gas supply and secure thousands of jobs in Scotland. 

"Amicus' report is out-dated.  They have failed to notice the renewed optimism and energy in the North Sea.  Its proposals are out of touch with reality and worse, could do lasting damage to the industry, cost investment and jobs and reduce the industrys competitiveness at a crucial stage in its life cycle.   Note to Editors

1.The UK Offshore Operators Association (UKOOA) is the representative organisation for oil and gas companies licensed by the UK government to explore for and produce hydrocarbons offshore around the British Isles.  It has 30 members.

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