UK Offshore Operators: Treasury Turns ‘Blind Eye’ to Industry

Responding to Wednesday’s Budget statement by UK Chancellor of the Exchequer Gordon Brown, the UK Offshore Operators Association (UKOOA), the representative body for North Sea production companies, accused the Treasury of turning a blind eye to the urgent needs of the UK’s offshore oil and gas industry where production is being undermined by high costs and punitive tax.

Malcolm Webb, UKOOA’s chief executive, said: “The Treasury clearly recognizes that lower taxes are good for business, but unfortunately fails to apply that principle to our industry.
“UK offshore oil and gas producers have not been given any reduction in corporation tax and still continue to suffer under a punitive 50% rate for corporation tax and a total tax rate of 75% on the production from its older assets. The Chancellor was quick to raise the tax take from this industry when he saw oil and gas prices rising towards $60 dollars a barrel. But now that the price of gas (which makes up almost half of total UK production) has fallen to the equivalent of $20 per barrel, he sits on his hands.

“With cash flows from UK gas fields now under severe pressure and the average cost of new developments running at $25 per barrel, doing nothing is simply not good enough. The Treasury needs to wake up to current realities.”

Rigzone