The association said that cuts into a basin-wide Investment Allowance would be a positive signal to investors – and urged its delivery to be ‘fast-tracked’ and to take effect from Budget 2015 if the N. Sea is to regain any attraction for investment in the current climate.
Many leading N. Sea oil operators – such as BP, Talisman and ConocoPhillips – have announced hundreds of job cuts in Aberdeen, while others, such as French oil giant Total, have announced a jobs freeze as crude oil prices dived by more than 50% in the past six months.
Speaking in Edinburgh, Malcolm Webb, Chief Executive, Oil & Gas UK, (pictured, above) said: “We are encouraged to note that work on the Investment Allowance announced in the Autumn Statement is progressing. However a reduction in the headline rate of tax is also essential to really improve the international competitiveness of the N. Sea.
“Given the maturity of this basin, I’m afraid there will be no second chances.”
“We also welcome the comprehensive scope of this new Investment Allowance which must also be easily accessible for all investors and help promote investment in all types of activity which seek to maximise economic recovery and extend the productive life of the basin. It also welcomes the effort that has been made to consider appropriate transition measures that preserve the value of existing allowances under this new regime.
“The allowance recognises that investment in N. Sea oil and gas production and exploration delivers skilled jobs, energy security and ultimately provides production revenues back to the UK Exchequer.
“We will be seeking further clarification on a number of points, including the rate of the Investment Allowance which must be competitive. “We now need a much lower, simpler and more stable tax regime that will allow the investor to shift their focus away from fiscal risk towards investment opportunities. We see this announcement as a first step.”