Thursday 8 March 2001

UK Offshore Operators Respond to Budget Statement

Following the Chancellors Budget statement this afternoon, the UK Offshore Operators Association, which represents 32 oil and gas exploration and production companies operating on the UK Continental Shelf (UKCS), said:

"The offshore oil and gas industry welcomes the Chancellors statement today. We have always been confident that the Government understands fully the economics of the UK industry and the challenges it faces from other parts of the world for investment capital.

"Recent announcements have confirmed earlier impressions that investment is returning to the North Sea and the stability of the UK fiscal regime is one of the reasons for this".

Note to Editors

 

1. The UK Offshore Operators Association (UKOOA) is the representative organisation for the UK offshore oil and gas industry. Its 32 members are licensed by the British Government to explore for and produce hydrocarbons in UK waters.

2. The industry supports 270,000 jobs in the UK. In Scotland, industry supported jobs represent 7 percent of total employment.

3. The industry has accounted for some 18 percent of total UK industrial investment over the last ten years. Although development expenditure declined from £5.8 billion in 1998 to some £3.2 billion in 1999, in that year it still represented 13 percent of total UK industrial investment.

4. Development spending in 2000 is estimated to be £3 - £3.2 billion.

5. A recent survey of operators intentions indicated that confidence is returning to the UKCS, with projections for 2001 showing an anticipated rise in investment of around 30 per cent to £4 billion.

6. The industry has identified 120 probable and possible new fields which could proceed in the next 5 years, suggesting current record levels of production could be sustained until 2004.

7. The industry believes that there could be up to 36 billion barrels of oil equivalent (boe) still to be recovered from the UKCS, in addition to the 28 billion boe already produced since the 1960s.

8. Whilst UKCS exploration activity declined to its the lowest for 30 years in 1999 there was a recovery in 2000, resulting in some 37 wells being started.

9. Treasury receipts from offshore taxes in 1999/2000 was £2.6 billion. The industry has contributed a total of some £170 billion (2000 prices) to the Inland Revenue since the 1970s.

10. The Treasury stands to gain from the stronger crude oil prices with Government forecasts in November predicting offshore tax revenues rising to some £5.3 billion in 2000/2001, almost £2 billion above previous estimates. For every $1 per barrel increase in the price of oil, it is estimated that tax revenues will rise by about £225 million in the first year and by about £300 million in each year subsequently.

11. In 1999 offshore oil and gas accounted for 84 percent of the UKs total primary energy production.

For more information, please call 020 7802 2400.