UK Abolishes North Sea Oil Royalty Tax

Gordon Brown, UK Chancellor of the Exchequer, said that the government will abolish the North Sea oil and gas royalty tax effective January 1, 2003. Royalties are currently charged at 12.5% of the gross value of oil and gas produced, minus an allowance for transport and treatment costs from older fields that were commissioned before 1982. The removal of the tax is intended to provide an incentive to continue production at the oldest fields, which would otherwise become unprofitable. The concession had been promised to oil companies last April when a new 10 percent corporate tax was levied on profits on all oil and gas production.