Wednesday 17 April 2002

UKOOA Response to the Budget Statement

The UK offshore oil and gas industry is surprised and concerned at the decision to introduce a 10 percent supplementary charge on North Sea profits. The UK Offshore Operators Association (UKOOA), which represents 30 oil and gas exploration and production companies operating in the UK, fears that this could undermine investor confidence in the long-term viability of the North Sea, the very thing that the Industry has been working with Government, through PILOT, to achieve.

UKOOA welcomes the Chancellors provision to increase capital allowances on first year investment in the North Sea. It also welcomes the proposal to consult the Industry on the abolition of Royalty which could help prolong the life of pre-1982 fields. Royalty is a 12.5 percent tax on production from fields which received development consent on or before 31st March 1982. Government tax take from UK offshore fields ranges from 30 percent to nearly 70 percent.

The Industry is currently evaluating the full negative impact of these different measures.

For more information, please call 020 7802 2400.