LONDON (Dow Jones Newswires), Apr. 22, 2009
U.K. Chancellor of the Exchequer Alistair Darling said Wednesday that he will introduce tax incentives to encourage the development of smaller oil and gas fields in the North Sea with the aim of producing an extra 2 billion barrels equivalent of the remaining reserves.
With immediate effect, a new allowance will reduce the tax that "qualifying new developments" pay when they first begin producing oil and gas, the government's budget report said.The government will also eliminate tax on gains from the sale or swap of North Sea fields, provided those gains are reinvested, the report said.
Darling said he will also amend rules that are currently barriers to changing the use of depleted oil and gas fields, for example by converting them into natural gas or carbon dioxide storage facilities.
The cushion gas used to pressurize gas storage facilities before they enter operation, which is a major cost for any storage developer, will be eligible for plant and machinery capital allowances, the report said.
U.K. oil and gas output is declining rapidly and is down almost 40% from its peak at just over 4.6 million barrels equivalent per day in 1999. Many remaining deposits of oil and gas are too small to interest international oil giants, but the smaller companies are struggling to raise money to continue their activities.
Exploration drilling in the U.K. North Sea was down 78% on the year in the first quarter, according to Deloitte.
Copyright (c) 2009 Dow Jones & Company, Inc.
Most Popular Articles
From the Career Center
Jobs that may interest you