Britain’s Treasury has held the first meeting of its Fiscal Forum, designed to promote a constructive, long-term engagement with the industry on theUK’s oil and gas tax regime.
The meeting, chaired by Economic Secretary to the Treasury Chloe Smith was attended by senior industry representatives and Minister of State for Energy Charles Hendry.
Malcolm Webb, CEO of industry association Oil & Gas UK and a forum member, said: “The discussions focused largely on the work which the Treasury, the Department of Energy, and the industry have undertaken together since Budget 2011.
“This work has revolved around how measures to extend the field allowance structure and provide certainty on decommissioning tax relief can stimulate investment and avoid infrastructure being prematurely decommissioned, at no net cost to the Exchequer.
“Whilst a number of robust projects have recently secured investment, we are concerned that over 1 Bbbl of the UK’s oil and gas resource will remain undeveloped in the current tax regime. Furthermore, resolving uncertainty on decommissioning relief could deliver an additional 2 Bbbl.”
Webb claimed that the market for mature North Sea UK assets has virtually dried up. In light of this and the steep drop in exploration drilling and production offshore the UK last year, measures to stimulate investment are urgently needed, he added.
He also reiterated Oil & Gas UK’s view that the industry needs a secure and predictable fiscal regime. He hoped Budget 2012, due to be delivered in March, “will contain the measures now needed to stimulate increased investment in the UK’s oil and gas resource in the medium and longer term and extend the productive life of the province.”
