Thursday 6 December 2007

Oil & Gas UK Welcomes Treasury Proposals as a Step in the Right Direction

Oil & Gas UK welcomes the publication of the Treasury's consultation document on the future of the North Sea fiscal regime, which addresses a number of inconsistencies in the current regime and paves the way for more focused discussion on the substantive issues. These are the overall tax burden, the future of petroleum revenue tax (PRT) and the ultimate re-use of oil and gas assets for carbon or gas storage.

The consultation document sets out proposals to extend corporation tax (CT) loss carry back, with a view to delaying decommissioning and extending the productive life of the North Sea. We welcome measures to address the inconsistencies regarding the application of PRT to decommissioning liabilities as well as the proposal to remove PRT non-payers from future exposure to the tax. These measures will give the industry greater certainty in these areas.

The document also acknowledges the industrys concern that the overall tax burden is dampening investment and has re-opened the consultation to address this and the other major issues over the next six months.

Malcolm Webb, Oil & Gas UK's chief executive, says: "The consultation document is the result of two years' engagement between Government and the UK oil and gas industry. It's a welcome step in the right direction.

"The changes proposed so far should help to extend the life of many fields and facilitate the transfer of assets. However, we believe the future of the North Sea can only be properly secured by reducing the overall tax burden to ensure investment can be sustained in this mature and challenging province. We look forward to a continued, meaningful engagement with Treasury."

Notes to Editors

1. Oil & Gas UK is the leading representative organisation for the UK offshore oil and gas industry. Its members are licensed by the Government to explore for and produce oil and gas in UK waters and those who form any part of the industry's supply chain. It has 64 members.
2. Discussions with the North Sea oil and gas industry were launched by the Chancellor at the 2005 Pre-Budget Report.

 

For further information, please contact:

Sally Fraser                                       Oil & Gas UK Media Relations                  2nd Floor                                                       232-242 Vauxhall Bridge Road     London SW1V 1AU             Tel:     020 7802 2404/2400 Fax:    020 7802 2401 Email: sfraser@oilandgasuk.co.uk Pager: 07659 183 999