U.K. Studies Tax Break on Oil-Rig Dismantling to Lure Investment
The U.K. Treasury and North Sea oil companies are studying plans for tax relief on dismantling oilfields to attract investment in decommissioning the sites.
Government officials met with industry representatives today for the first time since setting up the so-called Fiscal Forum in September to discuss taxes and ways to spur investment in marginal fields, the Treasury said in an e-mailed statement.
“The government committed to working with industry with the aim of announcing further, long-term certainty on decommissioning at budget 2012,” it said. The authorities will consider introducing a new category of field that would qualify for a field allowance, it said.
Last year, the oil industry criticized a U.K. tax increase on oil producers’ profits to 62 percent from 50 percent. In March, Chancellor of the Exchequer George Osborne also said he was considering reducing the tax relief on dismantling operations, known as decommissioning.
Oil and natural-gas projects on the U.K. continental shelf will attract investments in the next three years as crude prices top $100 a barrel, Wood Mackenzie Consultants Ltd. said Jan. 10. Energy explorers spent a record 7.5 billion pounds ($11.5 billion) on U.K. projects in 2011, it said.
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