Tax changes may see £40bn N Sea spending

THE Treasury yesterday announced plans for a series of tax changes which could pave the way for £40 billion in investment in the North Sea oil and gas industry.

The proposed changes have been put forward following a post-Budget meeting between the government and industry leaders at which oil operators complained that uncertainty over the costs of decommissioning ageing offshore installations was hindering future investment plans.

A Treasury spokesman said the proposed changes were aimed at giving oil and gas companies “more certainty” over the level of tax relief on the costs of decommissioning used assets in the North Sea.

Under the proposed changes companies will be able to claim at least half their decommissioning costs back in tax relief if they are paying in the case of another company’s default.

Chloe Smith, the economic secretary to the Treasury, said: “This is great news for jobs not just in the North Sea, but across the UK. These changes will also benefit the taxpayer, with increased tax revenues in the long term boosting the public finances.”

Oil and Gas UK, the pan-industry trade body, welcomed the Government’s initiative. Mike Tholen, the organisation’s economics director, said: “An effective solution should provide the industry with the long term confidence to invest in oil and gas activities for a long time to come and delay decommissioning of oil and gas infrastructure.”