The head of GDF Suez’s UK oil and gas business has urged the government to introduce further tax breaks for North Sea exploration.
Jean-Claude Perdigues, managing director of GDF Suez Exploration and Production UK, said there had been several allowances in recent months, but added operators needed greater support during the early stages of developments.
Mr Perdigues said GDF enjoyed a good relationship with the UK Government, adding: “We have seen a lot of good, positive decisions taken in the past 18 months with an increased focus on new tax allowances which have helped a lot of projects be sanctioned. We hope and expect more allowances are on the way to help incentivise the exploration phase, because the exploration of today is the revenue of tomorrow. That is good for us, the supply chain and the taxman.”
Mr Perdigues added: “We will be speaking to the UK Government more about incentives during that phase. The good thing is the UK Government is taking the right approach by focusing its support on projects and activities which are actually delivering value. It is not a blanket approach, it is a targeted approach to the needs of the industry and it is paying off.”
Mr Perdigues was speaking after Burntisland Fabrications announced it would take on 100 workers at its Arnish, Methil and Burntisland yards to build the accommodation unit for GDF Suez’s £1.4billion Cygnus development.
Cygnus was sanctioned in August 2012 and is expected to contribute 5% to UK gas production at its peak. The discovery – the largest gas find in the southern North Sea for 25 years – is expected to start producing gas at the end of 2015.
Mike Tholen, economics director with industry body Oil & Gas UK (OGUK), said there had been “disappointing” exploration in UK waters over the last few years.
OGUK’s 2013 activity survey revealed that an average of 21 exploration wells have been drilled in each of the last four years, compared with an average of 33 between 2005 and 2008. Mr Tholen said: “OGUK and the industry, together with government through Pilot, are monitoring the activity this year and recognise that access to rigs, finance and top-quality information is crucial in boosting the number of wells drilled.”
A spokeswoman for the Treasury said Whitehall’s engagement with the industry included a new ministerially-led fiscal forum.
“Over the last 18 months we have introduced an ambitious set of tax incentives, including new and extended field allowances and long-term certainty on decommissioning tax relief,” she said. “Taken together, industry believes these measures could unlock billions of pounds of new investment in the North Sea. Any future decisions on tax are a matter for the chancellor.”
Recommended for you
