UK representatives of the oil and gas industry have received the first decommissioning tax reliefs from the Treasury.
The increased industry certainty from the relief deeds will drive at least an additional £13billion of capital investment in the North Sea, the Tresury believes.
The Thursday presentation by the new Economic Secretary Nicky Morgan was attended by senior industry representatives including Malcolm Webb, Oil & Gas UK chief executive.
“The move will, at no cost to the Government, promote near-term investment in many mature assets and in the longer-term, postpone decommissioning by five to seven years on average and unlock a further 1.7 billion barrels of oil and gas over time,” Webb said.
“By allowing the industry to make a much fuller contribution to economic growth, this measure is great news for British jobs and tax revenues.”
The relief deeds are set to guarantee the cost of decommissioning will not steeply rise in the future, regardless of any tax regime change in the country.
Currently, the government offers tax relief at 50% (or 75% for older fields) on the costs of decommissioning equipment.
The total cost of decommissioning – which oil and gas companies are legally bound to carry out by the end of a field’s production life – is currently estimated at £35billion.
Recommended for you
