Industry body Oil & Gas UK has written to the Chancellor of the Exchequer to call for commitments in the Autumn Statement to help boost investor confidence in North Sea exploration and production.
A report published recently shows investment in the UK Continental Shelf fell to around £9billion this year, from a record £14.8billion in 2014, illustrating the challenges for investors in accessing fiance for asset development.
The trade body wants a number of measures put in place in order to help support the industry.
This would include the introduction of new measures to extend the Investment Allowance for operating expenditure that is aimed at increasing production from an asset or keeping it producing for longer.
It could include investment in Enhanced Oil Recovery techniques.
Oil & Gas UK said less than £100million of fresh capital has been committed to the basin this year, with only one new field approved.
This compares with five greenfield projects sanctioned last year with associated development capital at more than £4.3billion.
Deirdre Michie, chief executive, Oil & Gas UK said:“Sentiment and stability are important, and the Chancellor has a real opportunity to use the Autumn Statement to send a clear message to investors that the UK Continental Shelf is a great place to do business.
“Exploration and development drilling has fallen to record lows and industry figures reveal a drought of new investment approved in 2016 and 2017 looks no better.
“I have asked Mr Hammond to get behind the UK’s oil and gas industry by providing certainty in our fiscal regime, recommitting to the Treasury’s ‘Driving Investment’ strategy for the sector and, as part of the UK’s new industrial strategy, recognising our supply chain as a key strength in the economy, with world leading capability – equally valuable as aerospace or the automotive sectors, for example.
“The UK oil and gas industry is much more globally competitive than it was two years ago. The cost of doing business in the North Sea has come down significantly and production has increased for the first time in 15 years thanks to the industry’s efforts to make its operations more efficient.
“We urgently need to see new entrants encouraged into the market and increased asset trading is one area that could boost activity in the North Sea by facilitating the trading of late-life assets.
“But investors are also looking for certainty and we can’t underestimate the importance of government sending a strong signal of confidence and support.”
Oil & Gas UK has also called for the UK Government to re-affirm their continued commitment to the ‘Driving Investment’ fiscal strategy which recognises the need for a more competitive, simple and predictable fiscal regime as the basin continues to mature.
It also wants to see the promotion of the increasing competitiveness of the basin as well as the capability of the UK’s oil and gas supply chain, both nationally and internationally, as part of the UK’s new industrial strategy.
