Wednesday 25 July 2012

Government Support for UK Gas Developments Makes Economic Sense for Public Purse, says Oil & Gas UK

Oil & Gas UK today welcomed the Chancellor’s announcement of a new tax relief to support investment in the UK’s gas. Chief executive, Malcolm Webb, said: “Oil & Gas UK is greatly encouraged by the support announced for new shallow-water gas fields in the UK, which have particularly high capital costs and are subject to 62 per cent tax on production. It makes absolute economic sense to promote oil and gas production from the resources we in the UK are fortunate enough to possess; we believe that the measure should trigger the development of specific gas projects involving expenditure of £2.4 billion, the creation of 4,000 British jobs and £600 million of additional tax revenues for the public purse.

“In Budget 2012, the Chancellor was given powers to introduce a brown-field allowance to promote investment in existing fields. This would build on recent constructive interventions boosting investment by a further £3.5 billion, creating tens of thousands of high skilled jobs, adding tax revenues of over £2 billion and increasing oil and gas recovery by over 200 million barrels of oil equivalent. While we are encouraged by the Chancellor’s confirmation that the Government will continue to work with the industry on this, discussion with the Treasury has been ongoing for many months and time is now of the essence. For some fields near the end of their planned life, an early decision on support for further investment is urgently required if the UK is to reap the full benefit in terms of jobs, tax revenues and energy security.”

Ends
 
Notes to Editors

  1. An explanation of the UK oil and gas tax regime is here.
  2. The Government announcement can be found here.
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