UK: government support for older fields will boost investment, production and tax revenuesNews // September 10, 2012
The government in the UK has announced that it will iintroduce a new Brown Field Allowance which will shield up to £250 million of income in qualifying brown (older) field projects, or £500 million for projects in fields paying Petroleum Revenue Tax, from the 32 per cent Supplementary Charge rate.
Oil & Gas UK welcomed the Chancellor’s announcement of the new tax relief, which it is hoped will encourage investment in older oil and gas fields.
The organisation's economics and commercial director, Mike Tholen, said: “This is a strong signal of the government’s commitment to make the most of the UK’s oil and gas resources to the benefit of our energy security, the public purse and jobs.
"Oil & Gas UK is encouraged by the support announced for oil and gas ‘brown-fields’ in the UK which typically have high running costs and are subject to up to 81 per cent tax on production.
"This initiative will have an immediate impact in that it will help to promote investment and sustain production from many mature fields, enabling more oil and gas to be recovered from them and postponing decommissioning by a number of years.
“The measure builds on recent constructive interventions by the Treasury and we believe in the near term it should rapidly lead to a number of new investments amounting to £2 billion, create many thousands of high skilled jobs, add tax revenues of over £1.5 billion and increase oil and gas recovery by 150 million barrels of oil equivalent, and have a further long term impact.
"We recognise this is an on-going dialogue and we will continue to engage constructively with the Treasury on appropriate means to promote investment.”