As widely expected – the new UK oil and gas regulator is to be based in Aberdeen – and the advertisement for the job of the new chief executive of the Oil and Gas Authority (OGA) will be published on 19 June.
This was confirmed yesterday by Danny Alexander, Chief Secretary to the UK Treasury in a speech to the UK oil and gas industry association – and just 24 hours after Scotland’s First Minister told the same conference that Aberdeen should be a ‘shoo-in’ for the location.
The city had also recommended as the location of the new UK regulator in the Wood Review and Alexander explained: “We’ve been thinking about where it should be based. It is my view that it should be headquartered at the heart of the UK’s oil and gas industry – so I am delighted to confirm that the Oil and Gas Authority will be based in Aberdeen.
“And next week we will start the recruitment process to appoint the new chief executive.”
One of the first tasks in the new chief’s email box will be for the new Oil and Gas Authority to work with the government on a wholesale review of the ring-fenced tax regime for the oil and gas industry, looking at everything from tax rates to tax allowances.
Alexander explained: “The North Sea is an extraordinary economic asset, which generated almost £5bn worth of corporation tax revenues last year alone.
“Impressive as that is, it is considerably lower than in the past. Tax revenues have been declining for several years and independent forecasters expect them to continue declining.
“But just because the North Sea is becoming less of a tax asset it doesn’t mean it can’t remain a top economic asset.The review will look at how we achieve that transition.
“In my mind, it is clear that, in the future, the North Sea will need to face a lighter tax burden than it does now.
“Because that is the only way we can continue to attract investment, to extract full economic value, in the face of increasing costs, is to do it that way.
The Treasury will next month issue a call for evidence to make sure the industry can have a say as part of that review, which will look at:
- Field allowances.
- Decommissioning relief, and
- A review of taxation.
Malcolm Webb, Chief Executive, Oil & Gas UK, welcomed the creation and location of the Oil and Gas Authority, commenting: “The new regulator is now much more than just a vision or a theoretical construct. It is beginning to take shape and we look forward to the creation of the new regulator over the coming weeks and months.”