UK Budget measures may have limited appeal

Britain’s oil and gas industry will give a mixed reception to new measures announced today by the government, according to Deloitte LLP.

Offshore staff

ABERDEEN, UK -- Britain’s oil and gas industry will give a mixed reception to new measures announced today by the government, according to Deloitte LLP.

In the Chancellor’s annual pre-budget report, incentives to develop certain technically challenging fields were extended. “The Treasury estimates that these changes could unlock a further 300 MMbbl of oil,” said Deloitte tax partner Andrew Ogram.

The government also confirmed it would continue talks with the oil and gas sector on ways of supporting development projects west of Shetland. “However, with North Sea exploration in decline, the industry was hoping for bold new measures to kick-start drilling,” Ogram claimed.

Industry calls for upfront credit for exploration drilling – a system already in place in Norway to encourage E&A activity – were ignored, he pointed out. “Calls for bolder steps, such as cuts in North Sea tax rates or incentives to encourage investment in existing fields, were also ignored,” he added.

12/09/2009

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