Activity Survey 2015

ACTIVITY SURVEY 2015

4. Fiscal and Regulatory Reform In response to the various business challenges posed by a mature UK Continental Shelf (UKCS), a number of regulatory and fiscal changes are required. This should assist with maximising the UKCS’ hydrocarbon potential, as advocated by the recommendations of the UKCS Maximising Recovery Review, undertaken by an independent team led by Sir Ian Wood (the Wood Review) 2 . The necessary regulatory and fiscal changes are: 1) The establishment of a properly resourced, independent and expert regulator, the Oil and Gas Authority (OGA), backed by primary legislation enacted in the Infrastructure Act 2015. The OGA has been tasked with facilitating collaborative behaviour to maximise the realised value of the UKCS’ reserves to the economy as a whole. The OGA will also focus on industry priorities and act as a centre of expert knowledge to inform wider UK Government policy, building on the government’s Oil and Gas Industrial Strategy launched in March 2013 3 . 2) Wide-ranging reform to the UK’s upstream fiscal regime to ensure it regains international competitiveness and reflects the opportunities of a mature and high-cost offshore environment. This is best achieved by a substantial reduction in the headline rate of tax as well as a commitment from government that it recognises that rates will have to continue to fall as the resource opportunities diminish as the basin matures. Furthermore, there must be a significant simplification of the current field allowance incentives through a single, basin-wide incentive that is based on investment size. A commitment to implement an Investment Allowance was given in the Autumn Statement and industry is working closely with government to deliver the Allowance at Budget 2015.

2 The UKCS Maximising Recovery Review is available to download at www.woodreview.co.uk 3 The Oil and Gas Industrial Strategy is available to download at www.oilandgasuk.co.uk/OilandGasIndustryCouncil.cfm

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