Oil and gas industry calls for investor confidence ‘help’
7 Nov 2016
Oil & Gas UK, the trade body representing the UK’s oil and gas industry, has called on Chancellor Philip Hammond to use his Autumn Statement to help boost investor confidence in North Sea exploration and production.
According to Deirdre Michie, Oil & Gas UK chief executive, the Chancellor has “a real opportunity” to use the Autumn Statement to send a clear message to investors that the UK Continental Shelf (UKCS) is a great place to do business.
“Exploration and development drilling has fallen to record lows and industry figures reveal a drought of new investment approved in 2016 and 2017 looks no better,” Michie said.
The trade body’s recent Economic Report found that investment in the UKCS has fallen to around £9 billion this year, from a high of £14.8 billion in 2014, illustrating the difficulty for investors in accessing finance for asset development.
“I have asked Mr Hammond to get behind the UK’s oil and gas industry by providing certainty in our fiscal regime, recommitting to the Treasury’s ‘Driving Investment’ strategy for the sector and, as part of the UK’s new industrial strategy, recognising our supply chain as a key strength in the economy, with world leading capability – equally valuable as aerospace or the automotive sectors, for example,” Michie said.
As part of its commitment to the industry, UK Oil & Gas is asking the government to:
- Re-affirm its commitment to the ‘Driving Investment’ fiscal strategy which recognises the need for a more competitive, simple and predictable fiscal regime as the basin continues to mature;
- Promote the increasing competitiveness of the basin as well as the capability of the UK’s oil and gas supply chain, both nationally and internationally, as part of the UK’s new industrial strategy, recognising the sector as a key element of the economy;
- Complete the constructive work on decommissioning tax relief over recent budgets by introducing measures to enable tax relief to be transferred upon an asset sale. This would unlock the trading of assets by encouraging new entrants to the market and freeing up new investment;
- Introduce new measures to extend the Investment Allowance for operating expenditure that is aimed at increasing production from an asset or keeping it producing for longer. This could include investment in Enhanced Oil Recovery techniques.
