British budget ‘a turning point’ for North Sea oil industry

Experts from the British oil industry have recently reflected on the positive budget announced last month by chancellor George Osborne, with experts telling the Independent the tax reliefs are ‘a turning point’ for North Sea oil.

North Sea oil production has endured 12 consecutive years of rapid declines in production. However, the industry finally got a sigh of relief, as the budget avoided placing heavy tax burdens and instead introduced new tax breaks.

The tax breaks applied to small and deepwater fields in the North Sea, and there was further good news for investors in ageing oil fields, who were given the clarity they so desperately needed, guaranteeing hefty tax relief on the costs of decommissioning old infrastructure.

Malcome Webb, chief executive of the industry body Oil & Gas UK, declared the budget as a ‘turning point’, saying that it would result in the recovery of an additional 1.7 billion barrels of oil and gas and generate an extra £1 billion of taxes in the next five years alone.

This meant that the mood in the North Sea sector improved almost overnight, after the sector endured many years of tight fiscal policy and dwindling supplies. This was symbolically underlined by Algy Cluff, who announced a return to his former stomping ground after years spent mining gold.

He said: "I find myself inclined to go back to the North Sea, where I made my first big discovery.

"My headmaster always said all the best things end up in the same place and I never knew what he meant. But I think I do now."

Posted by Claire Manning