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NEWS | GOVERNMENT
UK oil and gas industry receives
fiscal assurances in 2018 Budget
THE UK OIL AND GAS
industry has come out on
top in this year’s budget,
with the government
promising to remove tax
barriers to the tune of £3
billion to encourage North
Sea investment.
In his speech, Chancellor
of the Exchequer
Philip Hammond made
reference to UK oil and
gas, introducing plans to
develop Scotland as a
global hub for oshore
decommissioning work and
stimulating investment in
the oileld services sector.
Oshore Technology
reports that under
Section 4.105 of the
budget, titled 'Oil and
gas taxation: transferable
tax history and retention
of decommissioning
expenditure', the
government noted that Scotland will become a global hub
the new transferable tax for oshore decommissioning
history mechanism would
remove tax barriers to new the rest of the UK.” and regulatory system in cent for older elds) to 40
investment oshore, and PwC UK’s Leader of its widest sense to see if per cent and a 62.5 per cent
that the government would Industry for Oshore Oil there is anything that can investment allowance was
also amend Petroleum and Gas Alan McRae said: be done to reduce costs. introduced,” said Scargill.
Revenue Tax laws to simplify “The measures announced Anything which reduces “Although oil price rises in
the sale of older UK oil and in the budget largely costs is important for recent months have buoyed
gas elds to new investors. conrm earlier proposals the government as well cash ¢ows in the sector,
The section concluded: and this will be warmly as business, as increased the maturity of the area
“This will provide further welcomed by the oil and gas protability for the oil mean that oil and gas are
support for an industry industry. The introduction companies results in higher more costly to extract and
that is a vital part of the of a transferable tax history taxes for the government.” nds are generally smaller.
economies of Scotland and mechanism for oil and gas Earlier measures reducing Many major international
companies should help tax within the industry are oil companies have divested
facilitate the numbers of also beginning to bear fruit. their UK assets. In this
deals taking place, and help GlobalData’s Senior context, an attractive
breathe new life into the Oil and Gas Analyst Will scal regime with a stable
sector by making it more Scargill noted that the investment climate is crucial
attractive to new investors. UK has one of the most for attracting the investment
This will help protect and attractive tax set-ups for oil to achieve the government’s
create jobs, and increase and gas production, oering aims of maximising
investment in both the the “lowest discounted economic recovery.”
industry and local economy. stake take out of the top Finally, despite the
“Any move to position 50 producing countries”. controversy surrounding
the UK as a global hub for “Measures in the the recent decision to
decommissioning will also 2015 and 2016 budgets restart UK fracking, and
be welcomed, to help bring reduced the tax burden subsequent seismic activity
Chancellor of the the current aspirations to on the sector signicantly. at the site, there was no
Exchequer Philip Hammond reality. There is certainly Headline tax rates were cut mention in the budget of
appetite to examine the tax from 62 per cent (or 81 per banning drilling projects. ■
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News.indd 3 15/11/2018 14:22
