WIRELINE - Autumn 2017

News Round-Up | Oil & Gas UK

3. Chancellor announces £5 million fund for exploration Chancellor Philip Hammond visited Aberdeen on 25 September when he announced further government funding of £5 million to the Oil and Gas Authority (OGA) to survey under-explored areas of the UK Continental Shelf. Visiting the new Oil & Gas Technology Centre (OGTC), Mr Hammond met with Deirdre Michie of Oil & Gas UK, Andy Samuel of the OGA, and Colette Cohen and Archie Kennedy of the OGTC. The Chancellor was briefed on industry’s progress in reducing its costs and improving efficiency, and Deirdre also emphasised the sector’s asks of Treasury as set out in its Budget Representation submitted to government on 22 September. These include: HM Treasury maintaining its commitment to its Driving Investment plan, as well as enabling tax history to transfer between sellers and buyers of assets to encourage more investment and delay decommissioning for as long as possible. Oil & Gas UK is also seeking a strong partnership with government to support the UK’s supply chain and help it capture a greater share of the export market. 4. Tackling the tax issues for late-life assets

There are a number of tax-related issues linked to asset trading and decommissioning that are holding back the business. After extensive consultation with members, Oil & Gas UK submitted a response to HM Treasury’s consultation on tax issues for late-life oil and gas assets. This follows many years of collaborative work with HM Treasury to identify an appropriate mechanism for transfering tax history upon the sale of assets so that a new owner could potentially use it for decommissioning. Overall, the proposed mechanism is at no additional net cost to the Exchequer. Romina Mele-Cornish, Oil & Gas UK’s fiscal policy manager, comments: “Enabling transferable tax history will offer a unique opportunity to encourage further deal flow at the asset level, which in the past has been a catalyst to attract fresh capital into the basin and promote new innovative business models in the UK North Sea. It could also bring additional production tax revenue to the Exchequer and postpone decommissioning.”

The benefits of transferable tax history

The problem The p blem

The goal

The goal

Potential purchasers

Lack of tax history

New owner (asset is core activity)

Current owner (asset is non-core activity)

Asset with current owner (non-core activity)

Benefits to industry

Benefits to the Exchequer

Benefits to the UK as a whole

Delay decommissioning and cost Increased taxes

The benefits to the Exchequer and wider stakeholders

Aids deal flow

Security of energy supply

Maximising economic recovery from the UK Con nental Shelf

Jobs on and offshore throughout the supply chain

Lack of tax history

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