As Chancellor George Osborne gets ready to deliver the first Conservative budget in 18 years Energy Voice looks back at the North Sea tax changes delivered pre-election and what to expect today.
In March, as the Liberal Dem and Conservative coalition geared up for the May vote, the Treasury introduced a raft of measures seen as long overdue by the North Sea oil and gas industry.
A pledge was made for the introduction of a “single, simple and generous” tax allowance, as well as investment in new seismic surveys in under explored areas of the UKCS.
The OBR (Office for Budget Responsibility) assessed it would boost North Sea production by 15% by the end of the decade.
Crucially, the Chancellor also announced the reduction of the supplementary tax charge from 30% to 20%.
Industry leaders had called for changes to help ease growing pressures on the North Sea oil and gas industry as a result of higher production costs and the oil price decline.
At the time, the OGA (Oil and Gas Authority) chief executive Andy Samuel said the sharp decline in oil prices had “magnified the very real challenges facing our industry.”
Since the Conservatives formed a government in May, they have hinted at further tax breaks for the North Sea.
In June, new Treasury minister Damian Hinds appeared to admit that the £4billion package of measures outlined by the coalition government at the last Autumn Statement and Budget did not go far enough.
The Exchequer secretary welcomed “encouraging” cost-cutting measures taken by oil and gas firms, and hinted that ministers were preparing to take further action to help the industry as it attempts to recover from the global price slump.
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