Friday 9 March 2001

Ukooa responds to Secretary of State’s announcement on Beatrice Royalty Remission

Following todays announcement that the Secretary of State for Trade and Industry is to grant royalty remission on Talismans Beatrice field in the Moray Firth, the UK Offshore Operators Association, which represents oil and gas exploration and production companies in the UK, said:

UKOOA welcomes Stephen Byerss step to encourage new investment in Beatrice which could prolong oil production in this mature field by another five to ten years.

Removing royalty on mature fields is a win-win move. By reducing taxation up front, Mr Byers removes a barrier to further investment. Fields, such as Beatrice, could be redeveloped and have their lives extended. And the more oil produced, the greater the tax return to Treasury in the long run.

There are around thirty mature fields which pay Royalty on revenues in addition to Corporation Tax (including about a dozen fields that also pay Petroleum Revenue Tax or PRT). As these fields approach the end of their lives, the heavy tax burden may discourage fresh investment and the opportunity to optimise recovery of the remaining oil and gas in their reservoirs can therefore be lost.

Mr Byers announcement today is in line with the objectives of PILOT to prolong oil and gas exploration and production activities in the UK and demonstrates that the Government is clearly listening and willing to act.

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