Oil & Gas UK today said measures in the 2012 Budget would result in “tens of billions of pounds of additional investment” in the UK North Sea.
Welcoming Chancellor George Osborne’s Budget today, the industry body’s chief executive, Malcolm Webb, said: “Oil & Gas UK is greatly encouraged by the package of tax measures announced by the Chancellor which together will result in tens of billions of pounds of additional investment to develop the UK’s economically important oil and gas reserves, all at no net cost to the Exchequer.
“The changes announced are the result of over a year of constructive, collaborative work and reflect the Treasury’s proper and considered approach to the industry’s proposals.
“The introduction of legislation to enable the Government to give the industry certainty on tax relief on decommissioning costs is a very significant step forward.
“The measure should delay decommissioning of oil and gas infrastructure, give rise over time to up to £40 billion of extra investment and result in the recovery of an additional 1.7 billion barrels of oil and gas.
“The Exchequer could receive an extra billion pounds of tax revenues in the first five years alone. Oil & Gas UK will engage strongly in the Treasury consultation over the coming months to help ensure that the details of the measure are established to best effect.
“The immediate extension of the field allowance regime to deep fields west of Shetland and to a wider range of small fields, together with the promise of an allowance for new investment in existing fields and infrastructure, also stand to provide a welcome boost to the UK economy.
“These measures, when implemented, should result in additional investment of over £10 billion and the production of hundreds of millions of barrels of the UK’s oil and gas.
“It will also help to stimulate exploration for further oil and gas reserves. In the meantime, we look forward to taking the Treasury up on its offer of continued engagement on extended allowances for high pressure high temperature fields.”
Mr Webb added: “We see today’s action by the Treasury as a turning point for the UK’s oil and gas industry – towards a more stable future fostered by constructive collaboration between the government and industry to ensure that the recovery of the country’s oil and gas resource is maximised.
“The Treasury’s recently established Fiscal Forum is an important part of that process and we look forward to continuing to play a positive role in this.
“The investment that will surely follow today’s announcements will drive growth in the economy, securing highly-skilled jobs, promoting advances in offshore technology, boosting tax revenues and reducing oil and gas imports.”