23rd Jul 2014; Chancellor George Osborne announces plans for a “game changer” tax break to boost North Sea oil and gas exploration.
Mr Osborne, speaking during a visit to Bibby Offshore Ltd in Westhill, Aberdeenshire, said, “We are announcing the consultation on a really big new tax break which the industry themselves. I think have described as a, “game changer” for the North Sea oil and gas exploration – that’s the ultra high pressure, high temperature tax break field allowance. “This will mean we can go ahead with some really big investments in the middle of the North Sea, particularly the Culzean field, and that will create billions of pounds of investment, thousands of jobs. It’s an example of us responding to the requests of the industry. “They wanted us to support these new developments, and it is part of a broader strategy to make sure we have an oil and gas regime that is fit for the future, fit for the maturity of the North Sea basin, and also one that is going to secure jobs and investment here in Aberdeen and Aberdeenshire for many decades to come.”
Mr Osborne said, “the allowance for ultra high pressure, high temperature fields will create billions of pounds worth of investment and thousands of jobs.
Industry body Oil and Gas UK last night welcomed the move and said the current tax regime had been a “barrier to investment”. The government said the new allowance would build on Sir Ian Wood’s recommendations for maximising economic production of oil and gas. Sir Ian’s review estimated there are between 12-24billion barrels of oil remaining, although the Office for Budget Responsibility (OBR) recently revised down its forecasts. The new allowance, designed to support investment in “technically challenging” projects and encourage exploration in surrounding areas, will reduce tax on a portion of a company’s profits from 62% to 30% at current rates.