UK government to address tax concerns

Offshore staff

LONDON --Oil & Gas UK has welcomed the British government's consultation document on the future of the North Sea fiscal regime.

The document addresses various inconsistencies in the current regime, and opens the way for discussions with industry on areas of concern. The main issues are the overall tax burden, the future of the Petroleum Revenue Tax (PRT), and re-use of redundant production facilities for carbon or gas storage.

The Treasury document also includes proposals on extending corporation tax loss carry back, to delay decommissioning, and to extend the UK North Sea's productive life.

Oil & Gas UK says measures such as the proposal to relieve non-payers of PRT from future exposure to the tax will give the industry greater confidence. It adds that the government has acknowledged that the overall tax burden is hampering investment.

Chief executive Malcolm Webb said the potential changes outlined to date should help to extend the lives of many UK fields and facilitate asset transfers. "However, we believe the future of the North Sea can only be properly secured by reducing the overall tax burden to ensure investment can be sustained in this mature and challenging province," he says.

12/11/2007