Confidence is returning to North Sea oil and gas investors as the UK Government introduces more tax breaks for the industry, according to a new report.
Drilling activity in 2012 is on course to be ahead of last year and the number of deals taking place in the industry is already up on 2011, according to Deloitte.
The business advisory firm’s latest quarterly North-West Europe Review, published today, said the figures contrasted with activity in Norway, where drilling operations in the third quarter were down on the same period last year.
Deloitte said new tax reliefs introduced by the UK Government, such as the shallow water gas allowance, were starting to deliver benefits.
Graham Sadler, managing director of Deloitte’s petroleum services group, said: “The government’s efforts to stimulate activity through a series of tax relief schemes are starting to filter through and, along with a sustained high oil price, smaller and technically challenging fields continue to be a much more attractive investment proposition than might have otherwise been the case.”
The report said 46 wells had been drilled in the first three quarters of the year, just 6% off the total number drilled in 2011, while 64 transactions for stakes in oil and gas fields were made, already up 5% on last year’s total.
Mr Sadler said that while activity was not back to pre-recession levels, “there’s a definite feeling of some confidence coming back to businesses operating on the UK continental shelf”.
The Scottish Government said the survey showed Scotland’s oil and gas sector was going from strength to strength.
A spokeswoman said: “With more than half of the value of the North Sea’s oil and gas reserves yet to be extracted – 24billion barrels with a wholesale value of £1.5trillion – oil and gas will remain an enormous economic resource for Scotland for decades to come. We are seeing rising levels of investment in the sector, with £8.5billion in 2011 expected to rise to £11.5billion in 2012, which demonstrates the confidence investors and the industry have in Scotland.”
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