UK Government makes loss on North Sea for first time in history

Brent oil field in the North Sea

The Government has announced a loss to the taxpayer for the first time in the history of the development of the North Sea.

The UK Government has found that the petroleum revenue tax for the 2015/16 tax year has failed to cover the cost of investment and decommissioning, with a shortfall of £24 million.

David Mundell, Secretary of State for Scotland, said: “These oil and gas revenue figures are particularly concerning, showing a fall to their lowest level since the 1960s.

“That’s why the UK Government is doing everything it can to support the North Sea industry to become innovative and competitive on a global scale.

David Mundell
David Mundell, Secretary of State for Scotland

“No other government has supported their industry so extensively. We have established the Oil and Gas Authority to drive greater collaboration and productivity within the industry, and in the last two Budgets we announced major packages of tax measures worth £2.3billion to ensure the UK Continental Shelf remains an attractive destination for investment.

“Next week I will travel to Dallas and Houston, the biggest oil and gas producing cities in the USA, to press the case for investing in Scotland, and to find paths for Scottish companies to export their expertise in the industry.

“We need to take action now to build a bridge to the future of the North Sea and help the UK’s oil and gas industry to export its world-class expertise around the globe.”

HM Revenue and Customs said: “Low oil prices in 2015-16 combined with continuing high levels of investment and increasing amounts of decommissioning expenditure have resulted in Government revenues declining to -£24 million, their lowest levels since records began in 1968-69.

“In 2014-15, the figure was £2,150 million.

“PRT revenues were -£562 million (in comparison to £77 million in 2014-15) whilst corporation tax revenues fell by 74% from £2,073 million in 2014-15 to £538 million in 2015-16.

“Government revenues declined from £10.9 billion in 2011-12 to £6.1 billion in 2012-13, and then to £4.7 billion in 2013-14.

“Significant investment in both existing developments as well as new projects, a decline in the volumes of oil and gas produced combined with a halving in the oil price between 2011-12 and 2015-16 has resulted in Government revenues decreasing to their historical low.”

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