Chancellor George Osborne’s “major package” of tax changes aimed at boosting North Sea investment will include an extension to small field allowances and legislation to promote brownfield projects.
According to documents published by the Treasury following Mr Osborne’s speech today, the package – to “secure billions of pounds of additional investment in the UK Continental Shelf” – will see:
A contractual approach to offer long term certainty on decommissioning relief
An increase in the allowance for small fields to £150million and and increase in the size of field qualifying for the maximum allowance to 6.25million tonnes (about 45 million barrels), tapering to no allowance at 7 million tonnes (about 50 million barrels)
A new £3billion field allowance for particularly deep fields with sizeable reserves west of Shetland
Primary legislation to be introduced in the Finance Bill 2012 to allow the potential introduction of measures to support investment in brown-fields as well as further engagement on how these allowances could be structured to help unlock investment.
A promise to continue to consider potential changes to the existing allowance for high pressure high temperature fields.
The measures have been introduced to “attract investment in energy, ensure energy security, meet the UK’s carbon reduction targets, and make the best use of the nation’s natural resources,” according to Treasury documents.
The Chancellor also said the government would publish a strategy for gas generation in autumn 2012.
“Gas is cheap,” he said, “and has much less carbon than coal and will be our largest single source of electricity in coming years.”
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