Wilson welcomes abolition of North Sea RoyaltyNews // December 6, 2002
The announcement was warmly welcomed by UK Energy Minister Brian Wilson, who said: "Abolition of North Sea Royalty gives the industry a firmer footing to plan essential investment in the UK Continental Shelf. The industry generally favoured early abolition to provide investment stability and this is reflected in the Chancellor's announcement today. The abolition of this obsolete tax has simplified the North Sea fiscal regime and will be worth around £150 million to licensees inthe next year alone."
Royalty applies only to fields approved before April 1982 and its abolition will simplify and modernise the North Sea fiscal regime. Together with the 100 per cent first year allowance for capital expenditure, introduced in the Budget, it is designed topromote long-term investment and ensure a healthy future for the UK's oil and gas industry.
Royalty is charged at 12.6 per cent of the gross value of oil and gas won in a particular licence area, less an allowance for the costs associated with the conveying, treating and initial storage ofthe oil and gas. Royalty was abolished in the 1980s for all fields given development consent on or after 1 April 1982.