UK Industry Asks for Further Tax Cuts

Concerted action by the UK industry to improve efficiency across the sector is leading to an estimated 22% – over £2 billion – reduction in the cost of operating existing assets by the end of 2016, reads a report by Oil & Gas UK released on Wednesday, adding that production in the first half of the year is about 3% higher than the same period in 2014. 

“Strong investment in asset integrity over the last four years, coupled with measures being taken to improve the efficiency of assets offshore, have resulted in better output from many existing fields and we expect the rate of decline in production from those fields to slow significantly over the next two years. Taken together with the start-up of the sizeable Golden Eagle field, the Government’s provisional data show that production in the first half of 2015 was 3 per cent higher than the same period in 2014, an indication that over this year, we are likely to see annual production increase” Mike Tholen, Oil & Gas UK’s economic director, conceded.  

The British Association also asked the Government to further cut taxes on oil and gas activities.

“The Government’s restructuring of the tax regime to provide a more fiscally competitive proposition and its funding of seismic surveys to open up new areas for exploration are steps in the right direction but with lower commodity prices expected over a prolonged period, it is now time to consider further lightening of the tax burden to help drive maximum economic recovery of our oil and gas” Deirdre Michie, Oil & Gas UK’s chief executive, said in a note.