CHANGES to the tax system are making Britain a more attractive drilling location for oil and gas companies than arch-rival Norway, according to a report published today.
Drilling activity in British waters leapt by 64 per cent year-on-year in the three months to 30 June, compared with a 33 per cent fall in Norway, Deloitte’s quarterly report found.
Existing tax breaks – for heavy oil, high-temperature, high-pressure and small fields – are tipping the balance in favour of investment in British waters, the accountancy firm reported, with measures outlined in the Budget expected to give a further boost to drilling.
Graham Sadler, managing director of Deloitte’s petroleum services group, told The Scotsman: “The post-winter spurt in activity does seem a little bit bigger than normal, so these figures are encouraging.”
Sadler said that Britain could receive a further boost to its drilling activity as companies are examining the measures introduced by Chancellor George Osborne in the spring.
He thinks that, if the coalition government follows through with plans unveiled earlier this month to introduce tax breaks for decommissioning, then further cash could be freed up for exploration, appraisal and production wells.
Sadler said: “The overall trend on the UK continental shelf is still a downward trend. All these new wells will do is slow that decline. Sadly we’re in a declining oil and gas providence, which is what you would expect in a mature area. So any steps that can be taken to bring on production are to be welcomed.”
He added: “These statistics always sound very exciting because we’re operating from a low base of activity. We have some way to go before we are back to the levels seen in 2009 and 2010.”
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Friday 24 May 2013
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