Start of Total gas production in Tormore-Laggan proves the case for UK tax-breaks in N. Sea exploration, say SNP MSPs

Total Laggan Tormore field2SNP MSP Mike Mackenzie has highlighted the major opportunities for the North Sea oil and gas industry with the right fiscal regime in place to stimulate exploration, development and production. 
In a parliamentary question to Deputy First Minister John Swinney, the Northern Isles MSP welcomed reports that the Laggan and Tormore fields West of Shetland have commenced production and are expected to provide around 8% of the UK’s gas needs – enough to supply around two million homes. 

He said: “It is clear that while a number of challenges remain for the oil and gas sector, with the right support and fiscal regime we can increase exploration, development and production – ensuring a viable future for the industry.”  

In reply, Swinney said: “I think it’s very clear from the experience of Total in relation to the Laggan and Tormore fields that the existence of a tax allowance for deep-water gas developments has undoubtedly assisted in the process of securing this advancement.

Mike MacKenzie MSP
Mike MacKenzie MSP

“I very much welcome the steps that were taken in the budget last Spring by the Chancellor to improve the fiscal regime in the North Sea, it certainly needed to be improved and it was improved. We would encourage further developments as part of the preparation for the budget later this year which would enable us to address some of the further challenges to improve the fiscal position of North Sea oil and gas companies.”

Industry body Oil and Gas UK has recognised that the development of Laggan and Tormore was made possible by the introduction of specific tax allowances for deep-water gas development several years ago – making the strong case for further action from the UK government to stimulate Scotland’s vital oil and gas industry which faces global challenges. 
Welcoming the start-up of production in the field, Oil & Gas UK Chief Executive Deirde Michie stated: “The significant economic contribution made by the project illustrates how changes to the tax regime can be a real enabler in maximising the economic benefit from our oil and gas reserves”.

  • Perth-based utility SSE owns a 20% interest, which help meet the needs of SSE’s gas-fired power stations and contribute to security of electricity supply

The nearby Edradour and Glenlivet fields being developed by the same partners are expected to start in 2017 and 2018 respectively keeping production at peak rates through to 2020.

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