UK Oil Industry Confidence Increases on Quarter

LONDON (Dow Jones Newswires), Aug. 17, 2011

The outlook of firms producing oil and gas in Britain improved in the second quarter from the previous three months, data from Oil & Gas U.K. showed Wednesday, although the industry body said business confidence remains "fragile" in the wake of a tax increase announced in March.

Oil & Gas U.K. said overall industry confidence increased modestly from 51 to 54 points. The index measures a number of economic indicators and gauges overall industry confidence on a 100-point scale, with a rating above 50 indicating a more positive outlook and a rating below 50 representing a more negative viewpoint.

Industry confidence fell 12 points on a quarterly basis in May after Chancellor of the Exchequer George Osborne in March imposed a large and unexpected tax rise on the sector, increasing the state's take on oil and gas profits to 32% from 20% overnight.

The government has since announced a concession to North Sea producers by offering some relief for investments in marginal fields.

Ken Cruickshank, Oil & Gas U.K.'s supply chain manager, said that while confidence had improved among the majors, the outlook among independent operators had soured further.

"While it appears that some companies may feel reassured by the Treasury's willingness to engage on ways to mitigate the negative impact of the tax increase on investment, the confidence of many independent operators in particular continued to decline in the second quarter," Cruickshank said.

Copyright (c) 2011 Dow Jones & Company, Inc.


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