LONDON: The UK’s new Oil and Gas Authority has been asked to undertake an urgent review of conditions for energy companies undertaking investments in the North Sea, prompting the industry to again call for radical tax reform.
UK Energy and Climate Change Secretary Edward Davey has asked Andy Samuel, CEO-designate of the OGA, to identify key risks to oil and gas production in the UK Continental Shelf (UKCS) and to determine what measures might be taken by the Government and industry to mitigate them. The move comes in the wake of recent falls in global oil prices.
Malcolm Webb, Chief Executive of industry association Oil & Gas UK, welcomed the announcement. He said that he hopes the OGA can be “a highly effective catalyst for improvement.”
Tax rates ranging from 60 percent and up to 80 percent are simply no longer sustainable; even upon a rate reduction to 30 percent, oil and gas producers will still be paying corporation tax at a rate 50 percent higher than the rest of British industry,” he said.
Earlier this month, Oil & Gas UK warned that, with oil prices continuing to fall, the tax breaks promised in last year’s Autumn Statement are no longer enough to help the industry. Webb has called on the Government to implement the Treasury’s pledge of a simplified tax allowance by Budget 2015 and recommended the abolition of the 30 percent Supplementary Charge (an additional charge on a company’s ring-fenced profits, excluding finance costs). The Supplementary Charge was reduced from 32 to 30 percent from January 1, 2015.
