FT: “Oil companies want George Osborne to make good his promise of tax reforms to encourage more investment in the North Sea or risk a collapse of the sector.”
“The head of industry body Oil & Gas UK has warned the chancellor and his number two at the Treasury, Liberal Democrat minister Danny Alexander, that without tax cuts and the reform of allowances to encourage development and exploration, “swaths of the UK continental shelf will be pushed into terminal decline”.
The warning from Malcolm Webb, chief executive of the industry’s leading lobby group, comes in spite of two years of record investment in UK waters.
This year the UK’s continental shelf is expected to attract £13bn in capital investment, after £14.4bn was committed in 2013. Another £39bn has been approved, much of it sanctioned during a sustained period of high global oil prices.
However, Mr Webb and other observers point out that increases in operating costs, a collapse in exploration drilling and sharp falls in production of oil and gas in British waters threaten to extend a collapse in cash flows from the once-prolific basin.
….In particular, they want the chancellor to reverse a 12 percentage point increase in the supplementary charge in his 2011 Budget, which raised their top marginal tax rate to 81 per cent.”
Future Today
