One of my priorities since taking up this job five months ago has been working with industry to discuss ways to support new investment and jobs in our oil and gas industry and I believe the Budget delivers such a package.
This time last year the Treasury took a tough decision on the supplementary charge as part of a package to support motorists. But we also pledged to look at whether we could deliver long-term certainty on tax relief on the costs of decommissioning infrastructure, such as rigs and platforms at the end of a field’s life.
We’ve done that by pledging to sign contracts with industry that will guarantee the long-term level of relief that companies can expect.
We hope this will bring more investment by owners and in particular encourage smaller, specialist operators to have the opportunity to invest in innovative projects in mature fields.
There is also positive news on field allowances, which reduce the tax burden on a section of profits from oil and gas fields that are more difficult to develop.
The small field allowance is to be doubled to £150million and the size of field that qualifies for the allowance will also be doubled. A new allowance for large, deep fields – aimed at the west of Shetland region – will be worth £3billion.
Companies have raised the issue of field allowances for additional investment in fields which have already been developed. We will continue to listen to the case for this and other targeted, affordable changes, such as further support for high-pressure, high-temperature fields.
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