UK Government unveils measures to boost oil and gas production
18 March 2015
UK Chancellor George Osborne announced several measures aimed at boosting oil and gas production as part of his 2015 Budget speech on March 18. The first was a new tax allowance to stimulate investment across the industry, and the second an investment of £20 million ($30 million) to carry out new seismic surveys in little-explored areas of the UK Continental Shelf.
The Government is also cutting both the Petroleum Revenue Tax and the Supplementary Charge, which is paid on oil and gas profits.
"While the falling oil price… is good news for families across the country, it brings with it challenges for hundreds of thousands whose jobs depend on the North Sea. Thanks to the field allowances we've introduced we saw a record £15 billion invested last year in the North Sea but it's clear to me that the fall in the oil price poses a pressing danger to the future of our North Sea industry unless we take bold and immediate action. And I take that action today," Osborne told MPs at the House of Commons.
"First, I'm introducing from the start of next month a single, simple and generous tax allowance to stimulate investment at all stages of the industry. Second, the government will invest in new seismic surveys in under-explored areas of the UK Continental Shelf. Third, from next year, the Petroleum Revenue Tax will be cut from 50% to 35% to support continued production in older fields. Fourth, I am – with immediate effect – cutting the Supplementary Charge from 30% to 20% and backdating it to the beginning of January. It amounts to £1.3 billion of support for that vital industry in the North Sea."
He said the Office of Budget Responsibility assessed that the new tax measures would boost expected North Sea oil production by 15% by the end of the decade.
Oil & Gas UK Chief Executive Malcolm Webb said the measures were welcome.
"Today's announcement lays the foundations for the regeneration of the UK North Sea. The industry itself must now build on this by delivering the cost and efficiency improvements required to secure its competitiveness."