Deloitte comments on North Sea tax changes announced today by the Chancellor of the Exchequer
7 September 2012
Commenting on the North Sea tax allowances announced by George Osborne, Roman Webber, Deloitte tax partner, said:
“We welcome today’s announcement of the UK North Sea tax ‘brownfield allowance’ which will encourage further development of existing North Sea oil and gas fields.
“The new ‘brownfield allowance’ should stimulate investment in older fields where it was previously uneconomical. Such investment is vital in preserving and extending the life of existing North Sea infrastructure, holding off decommissioning and maximising the recovery of the UK’s oil and gas resources. This is in addition to other field allowances already confirmed this year which were targeted at new field developments.
“We have already seen an increase in exploration and appraisal drilling activity this year, increasing by 64% in the second quarter of 2012, compared to same quarter in 2011. Deal activity - where oil and gas fields are bought or sold - was also up 47% in the same period. We expect the brownfield allowance to stimulate development drilling as well as deal activity, as companies will be re-evaluating mature assets. Today’s measures are yet another positive step taken this year by the Government to make the UK Continental Shelf more attractive and to continue to restore confidence in the industry.
“Enabling legislation for the introduction of this allowance was already included in the Finance Act 2012, announced earlier this year. The allowance will work by reducing the profits subject to the 32% Supplementary Charge. The level of the allowances available will depend on the expected project costs and incremental reserves, but will be worth up to a maximum of £160m net for projects subject to Petroleum Revenue Tax (PRT) and £80m for those that are not subject to the tax.”
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.
Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited