UK Oil & Gas Industry Tax Changes

Oct. 4, 2012 - PRLog -- Mr Salmond’s speech criticised the UK Chancellor George Osborne's £2bn oil tax increase.  The conference was looking at the energy sector over the next 40 years and the SNP leader also called for stable tax incentives for decommissioning the 470 installations in UK waters over the next 20 years.

Speaking to members of the Scottish Council for Development and Industry (SCDI), he said a new oil and gas sector strategy would be published in the spring promising to outline how the Scottish government will help the industry to maximise extraction rates and secure its skills base.

Mr Salmond said “It is in everyone's interests for the oil taxation system to be incentivising, stable and fair and I urge the chancellor to ensure that next month's Budget delivers long-term stability, certainty and confidence across the industry”

"The Chancellor's decision last March to increase the supplementary charge paid by North Sea operators on their profits has been damaging to the prospects in more challenging and mature fields. The lack of consultation about the increase also undermined business confidence. With more than half of the value of North Sea oil and gas reserves yet to be extracted - representing an asset with a wholesale value of a trillion pounds - it is vital that the industry sees long-term stability in the tax regime."

The first minister added: "As around 470 installations are due to be decommissioned over the next 20 years, at a cost of between £24bn and £30bn, the Treasury must also provide the industry with assurances that decommissioning relief will not be restricted or withdrawn in the future."

Mr Salmond went on to welcome the fact that the UK government was working with the industry to look at reforms.

In July, the UK government announced tax changes which could free up billions of pounds for investment in the North Sea oil and gas industry.  Consultations on plans to guarantee the long-term level of decommissioning tax relief began with both ministers and industry leaders saying it would provide a long-term boost for jobs.

A Treasury spokesman described the changes as a "further step in unlocking the potential of the UK's oil and gas reserves".   A spokeswoman from the industry body, Oil and Gas UK said that if the measures were implemented effectively, they would promote billions of pounds of long-term investment, create tens of thousands of jobs, and delay the process of scrapping offshore installations.

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