Commenting on the tax reductions for the oil and gas sector announce by the Chancellor in the UK Budget, Uisdean Vass, Partner at law firm Bond Dickinson said:
“The reduction of the supplementary tax rate at 20% and the investment allowance changes will give greater security to the 380 000 jobs in the sector as well as helping arrest the decline in investment that we have seen over the past few years. The UK oil and gas industry has been hit hard in recent months by record high investment costs combined with a slump in global oil prices. The Chancellor’s statement today will have given the sector much needed hope for the future.”
Terry Scuoler, Chief Executive of EEF, the manufacturers’ organisation said, “the Chancellor gets three cheers from manufacturers for the measures he’s included to boost exporters. His decision to bring forward compensation for industries facing vast and uncompetitive energy costs, such as steel makers, is a huge vote of confidence for them and for manufacturing more widely. In addition he has committed to a stable and competitive tax regime, which we wholeheartedly support.”
Commenting on measures to help the oil and gas sector, Paul Raynes, Director of Policy at EEF said, “it is clear that the fall in oil prices has been a mixed blessing for manufacturers with firms exposed or delayed or cancelled investments in oil and gas exploration quickly feeling the effects through lost orders. Today’s announcement provides a solid signal from the Chancellor that government stands behind greater levels of activity in this important sector.”
Jon Fitzpatrick, Senior MD and Heat of Oil and Gas EMEA at Macquarie Capital and President of the Scottish Oil Club commented on the introduction of tax subsidies announced in the UK budget:
“George Osborne and the Treasury’s decision to introduce tax subsidies to the North Sea oil producers will be very welcome by the industry. However, in reality, these concessions will likely only benefit the handful of tax paying North Sea producers and will not address the much larger, structural issues facing the North Sea oil and gas industry.
“The sharp and aggressive fall in the oil price was unexpected and while we anticipate the price rising in the long term, it is impossible to predict when that may be. Incumbent management teams need to address many issues in the shorter term, cutting costs on existing producing assets and securing ongoing funding for North Sea development projects. There are a vast number of projects that are unfunded and unsustainable at current oil prices and many companies may not stay in the basin or business long enough to see the dawn of the oil price rising again. While in the interim, some critical North Sea infrastructure will likely be decommissioned leaving existing discovered resources at risk of never being developed.
“To address the underlying issues and attract substantive third party investment, the industry and UK government need to work more closely to encourage a more aggressive drilling and production programme and protect employment and economic opportunities over the longer term. The Treasury only need look across the continental shelf border for one such idea: rebates on exploration drilling.”
John McDonald, MD of OPITO said, “we welcome the measures set out by Chancellor George Osborne in today’s budget. The North Sea oil and gas industry has provided employment for hundreds of thousands of people and has raised the profile of UK skills and expertise around the world. It was critical that action taken to encourage investment, which will contribute to the detainment of skills held within the industry’s workforce. This will ensure the industry continues to be a positive contributor and source of employment in the years ahead. We are pleased the UK government has listened to the industry’s concerns. We look forward to working with government, employers and other partners to maximise the impact of these measures in the months ahead.”
Edited from press releases by Claira Lloyd