Thursday 4 December 2014

Oil & Gas UK urges Government to move swiftly ahead with fiscal reforms

Oil & Gas UK welcomes the Government’s long term plans for North Sea fiscal reform announced in Aberdeen today (4 December) by the Rt Hon Danny Alexander MP, Chief Secretary to the Treasury, and Priti Patel MP, Exchequer Secretary to the Treasury, noting in particular Treasury’s acknowledgment of the need to reduce the overall tax burden in order to maximise investment in UK offshore oil and gas development.

 

The proposals announced today include:

A basin-wide ‘investment allowance’ to simplify and replace the existing system of offshore field allowances;

Measures to stimulate exploration, including financial support for seismic surveys in underexplored offshore areas and further discussion on possible fiscal measures, such as tax credits;

Reforming the fiscal treatment of infrastructure;

The possible transferability of decommissioning tax reliefs. 

 

Speaking after today’s press conference, Oil & Gas UK chief executive Malcolm Webb said:

“A spirit of co-operation was very much in evidence today. We are encouraged to note that fiscal policy will now be framed in the context of the sector’s wider economic benefits and will also take account of the global competitiveness of the industry in terms of commodity prices and costs. Mr Alexander paid particular attention to the need for the Treasury to work with the new Oil and Gas Authority (OGA) and the industry in the tripartite approach as called for in the Wood Review, a view which Oil & Gas UK fully endorses and is committed to promote.  

“We are encouraged by these proposals but must now swiftly act on them given the current challenges facing the industry. The need for swift action was unanimously endorsed by all parties present (industry, Treasury and OGA) at the Fiscal Forum meeting immediately following the announcement. Senior industry figures at the meeting  committed to identify the priorities for most urgent implementation and work with the Treasury and the OGA to ensure these are delivered as quickly as possible, and certainly by Budget 2015. 

Michael Tholen, Oil & Gas UK’s economics and commercial director, who led the pan-industry response to the Treasury’s recent consultation on the North Sea Fiscal regime, commented: 

“We are pleased that the Government has responded positively to many of the concerns we raised during the consultation. In particular, we asked for the current, complex portfolio of different allowance types to be simplified and the proposed investment allowance will, we hope, do just that. This new allowance will of course need to be pitched at the right rate. However, we are all in agreement that actions speak louder than words. There is no time to delay, we are at a critical stage in the life of the North Sea and look forward to the Chief Secretary’s proposals being swiftly implemented.”

Ends

 

Notes to editors

For further information please contact Helen Jackson on 0207 802 2405 or hjackson@oilandgasuk.co.uk or Laura Ackland on 020 7802 2404 or lackland@oilandgasuk.co.uk

Oil & Gas UK is the leading representative organisation for the UK offshore oil and gas industry. Its growing membership, which comprises oil and gas producers and contractor companies, now numbers more than 500 organisations.