NAO says scale of North Sea decommissioning costs is highly uncertain

The National Audit Office (NAO) published the results of its investigation into oil and gas decommissioning costs on 25 January, concluding that government estimates of a £24bn total cost to taxpayers have a wide scope of uncertainty.

In the report, the NAO outlined the falling level of tax receipts from the basin, with much expenditure now highly tax deductible. In 2016-17, the government paid out more to oil and gas operators in tax relief than it received in revenues, resulting in repayments totalling £290mn. The Office for Budget Responsibility projects net annual receipts from the oil and gas sector to recover slightly, rising from £1.2bn in 2017-18 to a projected £2.4bn in 2022-23.

HMRC now plans to start publishing the total combined cost of decommissioning tax reliefs in January 2019.

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