Tax breaks worth £100m to Venture

Published on Wednesday 1 July 2009 21:15

VENTURE Production praised the government's recent North Sea tax-break programme yesterday, claiming it could benefit by up to £100 million.

Announced in April's Budget, the Treasury scheme offers oil companies up to 15m in tax breaks to develop North Sea discoveries that are small or technically difficult to exploit.

Chancellor Alistair Darling announced the move to encourage investment and prolong the life of the industry.

As a result, Aberdeen-based Venture, which specialises in buying discovered but undeveloped fields, predicts that more than ten of its fields will be eligible for the relief, creating a benefit to the company of 60m-100m.

Chief executive Mike Wagstaff said yesterday the programme would not move any of its existing North Sea prospects from being marginal to economic.

But the former merchant banker said that, "at the margin", the tax breaks would make additional fields viable for development and, as a result, Venture could now look at buying smaller fields.

Last month, the respected oil economist Alex Kemp, from the University of Aberdeen, predicted that the tax breaks might trigger the development of up to 50 additional fields over the next 25 years.

Wagstaff was sceptical of Kemp's numbers, "but even if 20, 30, 40 fields get developed in the medium term because of it, that's clearly worthwhile for UK plc", the Venture chief added. He heaped praise on the plan, which he said demonstrated long-term planning for the industry by the government.

Wagstaff said: "It shows that the government is thinking beyond the next election about how to maximise the returns from the North Sea. Clearly, it is a positive development, and it shows the government is thinking the right way, rather than using the oil industry as a piggy bank."

However, his comments appeared to be at odds with criticism for the scheme from within Westminster this week. A report from the Commons energy and climate change select committee claimed concerns that the measures did not go far enough "are genuine and legitimate" and it warned that 50,000 North Sea jobs might be at risk as a consequence.

Wagstaff said the committee's views were "somewhat surprising", given the length of time that has passed since the measures were announced.

He added: "I don't think we've had enough evidence over whether it will work or it won't yet."

His remarks, which are likely to be welcomed in the Treasury, came as Venture reported a 16 per cent rise in production in the first half of 2009 to 52,900 barrels of oil equivalent.