The UK Government has been condemned for making changes to the oil and gas fiscal regime which could damage both the industry and the taxpayer.
Speaking in the Finance Bill yesterday, SNP Treasury spokesperson Stewart Hosie MP said the UK government’s decision to introduce new bareboat chartering tax arrangements for leasing oil and gas rigs in the North Sea is likely to damage exploration activity as it could push up costs and reduce the availability of rigs.
The Scottish Government has repeatedly called on Westminster to reverse the changes, arguing the UK government are undermining exploration activity and could ultimately reduce the revenue that companies contribute to public finances.
The proposed legislation has been entered as an amendment to the 2014 Finance Bill and it will replace a long-standing global arrangement for negotiated fiscal agreements between offshore drilling rig owners and HMRC.
“Westminster’s volatile tax regime is damaging the oil and gas industry.
“The measures proposed in the new legislation entirely remodel the economics of the UK Continental Shelf, effectively putting up the rent whilst driving down international competitiveness and scrapping any credibility that the UK is open for business.
“Stability and predictability are essential if we are to realise the North Sea’s full potential. That is why the Scottish Government appointed an Independent Expert Commission on Oil and Gas in September 2013, who will report shortly and will make specific proposals in relation to the North Sea fiscal regime with a view to providing long term stability and predictability for the industry.”
“With new exploration wells at an exceptionally low number in the UK, the drilling contractors would have much preferred to have engaged with the UK Government on initiatives for stimulating activity rather than have additional tax burdens imposed.
“These new measures move the UK from a middle ranking tax environment, comparable to the USA and Europe to the unstable high end of global tax regimes. We are concerned that the massive investments by drilling contractors in new and upgraded rigs will now be directed to more fiscally stable regions.”
Pictured is Stewart Hosie MP