British economy between a rig and a hard place

Flaring up for Britain’s economy is the prospect of an end to North Sea oil and gas, with no clear replacement.

Weak oil prices, rising costs, and very narrow fiscal leeway to offer oil majors tax incentives are encouraging some to quit just as Britain struggles to recover from financial meltdown.
North Sea oil and gas revenues originally came when Britain’s economy was in such straits the government turned to the IMF for a loan in 1976: they funded the country’s economic restructuring under Margaret Thatcher.

By most predictions at the time, the North Sea should have stopped pumping a decade ago. It still pays more to government coffers than any industry including financial services.

Now oil executives say failure to provide incentives could mean the industry winds down in a decade or so, rather than deliver the 30 years of significant production its 25 billion barrels of remaining recoverable reserves is capable of.

Reuters