UK Chancellor Commits to £1.3 billion Support to Oil, Gas Industry
The oil and gas industry welcomed the £1.3 billion support announced by UK Chancellor George Osborne during his 2015 Budget Speech on Wednesday. According to Osborne, the measures aimed at supporting domestic production can help offsetting the consequences of low oil prices.
‘The biggest development since the Autumn Statement has been the further sharp fall in the world oil price’ he said in his speech at the House of Common, adding that low oil prices pose a threat to the future of British oil and gas industry.
He announced a “simple and generous tax allowance” to stimulate investment, and manifested the government’s intention to take an active role in new seismic surveys in under-explored regions of the UK Continental Shelf through direct investments. He also announced tax cuts.
“From next year, the Petroleum Revenue Tax will be cut from 50% to 35% to support continued production in older fields… I am with immediate effect cutting the Supplementary Charge from 30% to 20%, and backdating it to the beginning of January” he said in London.
Trade association Oil & Gas UK said that the move is ‘decisive’ to restructure the North Sea tax regime.
“These measures … properly reflect the needs of this maturing oil and gas province and will allow the UK to compete internationally for investment… We also welcome the Government’s support for exploration announced today” Malcolm Webb, Oil & Gas UK’s chief executive, commented.
He also welcomed Osborne’s announcement of £20 million for the newly formed Oil and Gas Authority. The funds will be used to commission seismic and other surveys on the UK continental shelf (UKCS).
On Monday, Oil & Gas UK asked for a double-digit reduction in the Supplementary Corporation Tax charge and a simplification of the tax incentive.