Last week’s Budget saw the Chancellor announce measures to aid the challenged oil and gas sector.
George Osborne stated that the Government believes in making the most of the UK’s oil and gas resources. The sector provides important economic benefits, supports thousands of jobs and supplies a large portion of the country’s core energy needs.
To deliver on this commitment, the 2016 Budget laid out the following measures:
- An effective abolishment of the Petroleum Revenue Tax by permanently reducing the rate from 35% to 0%
- A reduction in the Supplementary Charge from 20% to 10%
- A commitment to build on the new decommissioning powers of the Oil and Gas Authority (OGA) by undertaking further work with the OGA to reduce overall decommissioning costs
These measures have been back-dated to January 1st 2016 and the hope is that they will simplify the tax regime for investors and provide an equal standing between investment opportunities in mature fields and new developments.
The actions were welcomed by Oil and Gas UK. Deirdre Michie, CEO, said: “Today’s announcement does indeed mark further progress in modernising the tax regime for an increasingly mature basin. We welcome these measures as they will build on the industry’s achievements in improving efficiency in the face of low oil prices, boosting the sector’s competitiveness and helping to restore investor confidence.”
This package will go some way to ensure that the UK has one of the most competitive oil and gas tax regimes in the world – supporting jobs and investment and safeguarding the future of this crucial industry.
At Aspectus, the Budget presented an opportunity to respond to a breaking news event with intelligent, informed and interesting commentary. This year we secured coverage for our clients in Recruiter, Rigzone, The International Business Times and Upstream.
Coverage aside, the main point to stress is that the UK Continental Shelf has life in it yet, and with the industry’s sights set firmly on the future, the sector hasn’t given up on it. As operators, service companies and the entire supply chain make more sustainable, cost-effective decisions for a better future, the Government’s continued support will be crucial to this vital industry.