Wednesday 6 December 2006

UKOOA Welcomes Removal of PRT on Recommissioned Fields

While it has yet to study the detail of today's Pre Budget Report, the UK Offshore Operators Association (UKOOA), the representative organisation for UK oil and gas producers, is pleased to note that, in response to an Industry request, the Chancellor has announced that from 1 July 2007 previously decommissioned fields that are redeveloped will no longer be liable for Petroleum Revenue Tax (PRT). 

Malcolm Webb, UKOOA chief executive, said: "This is a sensible move which recognises that future field redevelopments should not be subject to PRT."

North Sea oil and gas fields developed before 1993 are liable for PRT, which together with the 50 percent special corporation tax rate, brings the marginal tax rate paid by these fields to 75 per cent.

"The measure should encourage investors to consider the viability of reopening abandoned fields to recover untapped reserves and is to be very much welcomed ", Mr Webb said.  "It is a clear demonstration of how the removal of a tax could generate new production and further tax revenues.

"HM Revenue & Customs' downward revision of its forecast of North Sea tax receipts points to the challenges we face with regard to cost inflation, volatile prices and declining production in the mature UK offshore areas.  

"There is an urgent need to adjust the North Sea fiscal regime and its competitiveness with a view to creating an environment that encourages investment for the long-term.  We are in dialogue with the Treasury on this very matter." 

Notes to Editors

• The UK Offshore Operators Association (UKOOA) is the representative organisation for oil and gas companies licensed by the UK government to explore for and produce hydrocarbons offshore around the British Isles.  It has 41 members

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