Tax break to boost oil & gas investment
12 Dec 2012
London – The UK government has published details of a contract oil and gas licensees aimed at providing certainty on the continued availability of tax relief for the costs of decommissioning oil and gas facilities.
The Decommissioning Relief Deed is the product of months of tricky discussions over the use of tax breaks to ensure investment and extend the productive life of the UK’s oil and gas fields.
The measures will have a profound positive impact on industry activity, according to industry body Oil & Gas UK. There are already, it said, signs that they are encouraging new commercial activity across the UK Continental Shelf
“This will enable investors to secure a level of certainty on decommissioning tax relief that can be reliably factored into investment decisions and commercial decommissioning security arrangements,” said Mike Tholen, Oil & Gas UK’s economics and commercial director.
“Long-term certainty on decommissioning relief will, at no cost to government, facilitate the sale of assets to companies most suited to invest in them, provide renewed confidence for late life investment by current and new owners and liberate new funds for use in extending the productive lives of many mature fields.
Together with the brown-field allowance announced in September, the scheme should promote near-term investment in many mature assets and in the longer-term postpone decommissioning by five to seven years on average and unlock a further 1.7 billion barrels of oil and gas over time.
“In this move, the Government has brought down what was a major barrier to investment in the UK’s oil and gas which should allow the industry to make a much fuller contribution to economic growth,” concluded Tholen.
