Friday 18 June 2010

Oil & Gas UK Statement: Emergency Budget (22 June 2010)

Oil & Gas UK’s economics director, Mike Tholen, said: “We are all aware of the challenges the Government faces in repairing the public finances.  The best help our industry can give at this time is to keep on investing in producing oil and gas that will help maximise the Treasury’s earnings from tax revenues over the long term.

“However, experience from the past decade tells us that any unexpected tax change will damage investment and production, with knock-on effects for energy supplies, employment and, importantly for the public purse, tax collected on oil and gas production.

“After four unexpected tax hits between 2002 and 2007, investor confidence in the predictability of the UK tax regime is only just recovering.  Capital expenditure is forecast to rise above £5 billion this year, having fallen from £6 billion in 2006 to £4.7 billion in 2009, with the number of new-fields coming into production also declining over the same period.

“Given that the UK will continue to rely on oil and gas to provide over 70 per cent of its primary energy needs until 2020 and beyond, any measures that hamper investment now will jeopardise future primary energy supplies and tax revenues. Maintaining the status quo at this time will encourage investment in new and mature assets and we will be more likely to maximise the economic recovery of this vital natural resource.”