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tax

Oil & Gas

Cairn in new battle with India’s taxman

Indian tax authorities last night slapped oil explorer Cairn Energy with a £1billion draft assessment order on a business transaction in the country seven years ago. In retaliation, Cairn said it has instructed counsel to fight the notice, which the Edinburgh firm argues stems from retrospective legislation imposed in 2012.

Oil & Gas

Oil sector may face ‘triple whammy’

David Glen, head of tax at PricewaterhouseCoopers (PwC) in Scotland, said there is a “real danger” plunging oil prices could result in investment becoming uneconomic, leading to diminishing field life and speeding up decommissioning. The latest economic report from the University of Strathclyde’s Fraser of Allander Institute, sponsored by PwC, joins calls for the Chancellor to take action in the Budget later this month. David Glen, head of tax at PricewaterhouseCoopers (PwC) in Scotland, said there is a “real danger” plunging oil prices could result in investment becoming uneconomic, leading to diminishing field life and speeding up decommissioning. The latest economic report from the University of Strathclyde’s Fraser of Allander Institute, sponsored by PwC, joins calls for the Chancellor to take action in the Budget later this month.

Europe

Sir Ian Wood: Major tax cut necessary

North Sea oil expert Sir Ian Wood, who led a review of the industry for the Government which reported last year, said a major tax cut was necessary to give producers the confidence to keep their operations going. He said the supplementary charge on profits should be cut from 30% to 20% although he acknowledged that would have little impact in the short-term because prices were so low.

Oil & Gas

Oil expert dismisses North Sea collapse claims

Oil and gas expert Alex Kemp said he did not agree with comments made which claimed the North Sea was “close to collapse”. Robin Allan, chairman of the independent explorers association Brindex, said it is “almost impossible to make money” with the oil price below $60 a barrel. However Mr Kemp said the current investment in new fields had been predicted to lessen when oil prices were at $90 a barrel.

Oil & Gas

Fergus Ewing in plea over oil sector tax

The UK Government must bring forward changes to the way the oil and gas industry is taxed by March or there will be “extremely serious repercussions“ for the sector, Energy Minister Fergus Ewing has warned. Danny Alexander, the Chief Secretary to the Treasury, said earlier this month that UK ministers would consult on several new approaches to taxation. The reforms would lower the tax burden on the industry, which has been hit by recent falls in crude oil prices.

Oil & Gas

Prime Minister defends tax breaks for North Sea oil

Prime Minister David Cameron has defended plans to give new tax breaks to North Sea oil and gas firms - describing the industry as "valuable and vital". The UK Government announced a series of measures in this month's Autumn Statement to boost the offshore sector as it struggles to cope with falling prices and rising costs. Mr Cameron, the Conservative leader, was questioned at yesterday's liaison committee about how the tax cuts squared with the government's environmental targets.

Markets

‘Speed up tax plans to spur exploration’

Offshore industry chiefs have urged the UK Government to speed up measures to support the sector after coalition ministers unveiled radical plans to reward North Sea investment. Tax regime changes aimed at making sure as much oil and gas as possible is extracted have been welcomed by operators. But they want them implemented sooner rather than later because of the challenges posed by low crude prices and high exploration costs. Highland MP and Chief Secretary to the Treasury Danny Alexander, and Exchequer Secretary to the Treasury Priti Patel, were both in Aberdeen yesterday to present their department’s financial review of the sector.

Opinion

Opinion: Revamping the UK oil taxation regime

In the Autumn Statement, the UK Government announced a number of measures aimed at increasing the competitiveness of the UK Continental Shelf. This included a 2% reduction in the Supplementary Charge to Corporation Tax, new tax allowances to encourage development of complex fields as well as enhanced tax measures for the exploration phase. But this was the curtain raiser to the main event in Aberdeen, where the Chief Secretary to the Treasury, Danny Alexander MP, presented a more detailed roadmap for the future fiscal approach to the UK oil and gas tax regime.

Promoted

Video: Oil and gas tax expert from EY reacts to Autumn Statement

The head of oil and gas for professional services firm EY said the Chancellor's announcement could prove to be a "turning point" for exploration and production in the North Sea. In an interview with Energy Voice, Derek Leith said the initial steps taken may receive a mixed review from the industry. Further announcements are expected tomorrow, in Aberdeen, by the Chief Secretary to the Treasury, Danny Alexander.

Markets

Opinion: Will the 2014 Autumn Statement help re-energise the UK oil and gas industry?

Chancellor George Osborne took the floor yesterday for what is the last Autumn Statement before the next general election, and probably the current Government’s final opportunity to impact the economy. But given the fiscal position the Government finds itself in with the budget deficit remaining high and with tax revenues lower than expected, was the Chancellor able to deliver any December cheer for the oil & gas industry? Well, we definitely saw a number of positive items. The Government restated its support for both the onshore and offshore oil & gas industries, with a mixture of tax and other incentives such as the allocation of £31m to fund the creation of a world class sub-surface research test centre through the National Environmental Research Council.

Opinion

Opinion: Fuelling the future of North Sea oil and gas extraction

We welcome the financial incentives named in yesterday’s Autumn Statement, which demonstrate that the Government has not only recognised the increased volatility of the North Sea oil sector stemming from falling global prices and diminishing reserves, but is taking action. We are pleased to see that, in line with GE Oil & Gas, this Government regards investment, innovation, collaboration and investment in future talent as the keys to unlocking the North Sea’s remaining potential. Oil & Gas exploration and extraction in the North Sea has been faced with increased complexity resulting in cost escalations causing delays and even cancellation of some projects; the supplementary charge reduction and ring fence expenditure announcements should have significant impact on freeing some investment.

Markets

Opinion: UKCS is open for business

We watched yesterday's Autumn Statement from the Chancellor George Osborne, with feelings of hope and trepidation. We understand the economic constraints under which today’s Autumn Statement is delivered and there’s consensus in our offices this afternoon that the immediate reduction of two percentage points in its tax rate is an important first step towards improving the fiscal competitiveness of the UK North Sea – but, without question, more needs to be done.

Markets

North Sea tax receipts predicted to fall by 40%

Official figures show that North Sea tax receipts are predicted to fall by 40% over the course of this year. The Office for Budget Responsibility (OBR) said revenues to the Treasury would drop to £2.8billion by the end of 2014/15, which is 0.9% lower than was forecast at the Budget in May. The independent body also said that tax to the Exchequer from the North Sea would be £1.6 billion lower in 2015-16 than was predicted in March, with “smaller reductions” due in later years.

Markets

Opinion: Autumn Statement – it’s a case of wait and see

Oh well, the North Sea is being kept on tenterhooks for a few more hours, with Treasury first secretary Danny Alexander scheduled to deliver the supposed main news today tomorrow. All chancellor Osborne was prepared to do was trail a few crumbs without even mentioning the North Sea fiscal review, let alone whether it will be the cornerstone of the Alexander delivery, though it of course will be. Just three measures were mentioned in his Autumn Statement address: “I can tell the house today that we will go ahead with an immediate reduction in the rate of the supplementary charge from 32% to 30%, we will expand the ring-fenced expenditure supplement from six to 10 years and we’re introducing with immediate effect a new cluster area allowance.”

Oil & Gas

UK Oil producers press for tax cuts as crude prices collapse

The UK oil industry, after chafing at suggestions it’s subsidized by the state, wants Chancellor of the Exchequer George Osborne to help save it from the market’s crashing prices. Osborne’s Autumn statement tomorrow, setting out tax and spending policies, is a chance for the more than 500 companies represented by Britain’s oil lobby to press for what it says is a fairer deal. In a letter sent to the chancellor last month, Oil & Gas UK said the collapse in prices comes on top of a 26% jump in unit costs for the industry last year alone. “Expect news on how the government will look to shore up investment in the North Sea,” said Sanjeev Bahl, Numis Securities Ltd.’s director of oil and gas equity research.

Oil & Gas

UK government provides £750m in North Sea tax breaks

The UK Government is providing £750 million a year in tax breaks to North Sea oil and gas, despite a pledge five years ago to end fossil fuel subsidies, campaigners said. A further £414 million in public money is going into fossil fuel exploration overseas from Siberia in Russia to Brazil, India and Nigeria, a report by the Overseas Development Institute and Oil Change International said. The organisations accused the UK Government of providing a total of £1.2 billion in subsidies a year despite signing up to a pledge by G20 countries in 2009 to phase out fossil fuel subsidies. Since then, generous tax breaks have been provided to international energy giants to explore in riskier, deep-water fields in the North Sea, they said.