Today, Chancellor George Osborne will set out the UK Government’s 2012 Budget, an announcement keenly awaited by the UK’s oil and gas industry.
But will it deliver in the eyes of industry bosses and leaders? Watch here to find out in our online Energy budget special.
One of the big issues it is hoped the Chancellor will give way on is decommissioning. It has been a bone of contention for a number of years.
Industry leaders have repeatedly pleaded with governments to provide stability so they can plan and invest for the future.
Last week the Press and Journal revealed the Chancellor intends to legislate to enter into long-term, legally-binding contracts with firms to guarantee the levels of tax relief offered to wind up North Sea fields and platforms
Companies have been deterred from buying and selling assets between each other in recent years amid fears that the government could pull the plug on tax breaks for such work and leave them with unexpected bills.
The Westminster coalition’s plan aims to drive new investment by ending the uncertainty and freeing up capital. Industry body Oil and Gas UK said the move would lead to the recovery of an extra 1.7billion barrels of oil and gas, as well as securing jobs in the north-east. Another analyst predicted a new boom in the region’s economy over the coming years.
The Press and Journal also reported it understood the Budget could contain extensions to field allowances, another measure for which the industry has called.
Oil and Gas UK estimates the tax increase last year led to about £20billion of investment projects being shelved – but it is understood many of those schemes could become viable again.
Mike Tholen, economics director at Oil and Gas UK, said: “Certainty that the current fiscal rules on decommissioning will apply for the long term is crucial to the future of the UK Continental Shelf. Appropriate measures to achieve this would be welcomed.”