22nd September 2010
On 16th September the UK Treasury published on its website a page on the UK oil and gas industry and its continuing importance to the UK economy. An extract is given below:
“There are a number of challenges facing the oil and gas industry. As resources become increasingly difficult to obtain and redundant drilling structures have to be removed, the Government must ensure that the tax regime in place is appropriate to these changes.
That is why in the June Budget, the Government reiterated the importance of a fair and stable oil and gas tax system as well as committing to take forward discussions with industry to ensure that this happens.
The Economic Secretary, Justine Greening, has met with numerous industry stakeholders and also travelled offshore to better understand the challenges facing industry.
These ongoing discussions will ensure that the UK’s oil and gas industry continues to flourish, serving the interests of industry, Government and the wider public. “
This publication, and the prominence given to it, is a refreshing shift in emphasis by the Government to the oil and gas industry. It would seem that the Government is convinced that the oil and gas industry is not just there to pay large amounts of tax but to provide a valuable resource for the UK, and may need fiscal assistance to develop the more difficult areas.
This latest statement repeats the requests already made for representations from the industry as to how the tax regime can be reformed to better ensure that more oil and gas can be extracted profitably. This view echoes comments made at the recent oil and gas direct tax forum, where the emphasis was on looking to employ existing provisions to provide relief for marginal prospects. This approach has been shown for example by the recent expansion of the scope of the small fields’ relief to the West of Shetland deep gas discoveries.
As there will not be a Pre-Budget Report this year it would seem that there is a window of opportunity for companies to lobby Government, either individually or through the industry committees, for the reliefs that would make a difference to their own projects prior to next year’s Budget; what is clear from this announcement and the profile they have given it is that Government is a willing listener and wants to assist the oil and gas companies in extracting the maximum resources possible from the North Sea.
If you want to discuss how this incentive can be used to lobby for your companies projects please contact any member of CW Energy.