Tax allowances and high oil prices boosted drilling in the UK North Sea by one- third last year, according to a review published today.
Last year, 65 exploration and appraisal wells were drilled on the UK continental shelf, up from 49 in 2011, according to business adviser Deloitte, while the sector also saw a surge in deal activity.
The annual review, compiled by Deloitte’s petroleum service group (PSG), said that 129 deals had been announced across north-west Europe in 2012, up from 118 the year before. About 80 of the 2012 transactions were in the UK, compared with about 60 previously.
PSG managing director Graham Sadler said: “After several years of caution and uncertainty, we have a more positive environment, where a number of factors such as tax incentives, high oil price and appetite to invest have combined to make 2012 the most encouraging year for a long time.”
The review added that measures announced to provide more certainty on decommissioning tax relief should allow cash, which had been tied up in financial guarantees, to be released for further investment.
Derek Henderson, energy partner for Deloitte in Aberdeen, said: “North Sea oil and gas production may have passed its zenith, but in the recently announced tax reliefs the UK Government has what appears to be a useful strategy to manage the decline in North Sea’s reserves.”