ECONOMIC REPORT 2013
35
Introduction
The special tax regime which applies to the
UKCS has undergone many changes since its
inception in the mid-1970s, not least in March
2011. It is clear that the regime will have to
be refined further in the years to come to
ensure that the overall objective, shared by
government and the industry, of recovering as
much oil and gas as is economically possible
from the UKCS is achieved. Since the shock of
2011’s tax rises, much work has been done by
both HM Treasury (HMT) and the industry to
find ways of helping to stimulate investment
in technically difficult and economically
marginal fields; investment that would not
otherwise happen.
Two such projects which have benefited
from newly introduced tax reliefs, called field
allowances, are outlined below, the first being
a greenfield development (Cygnus) and the
second brownfield (Montrose-Arbroath). It
should be emphasised that field allowances
only ease the tax burden; they do not remove
it. An explanation of how UKCS production is
taxed and how these allowances are applied is
given in Section 6.
GDF SUEZ E&P UK’s Cygnus Development
GDF SUEZ E&P UK Ltd is becoming one of the
leading, newoperators inoil andgas exploration
and production on the UKCS and is focused on
growth in three core areas: the central and
southern North Sea and west of Shetland.
Since entering the UK in 1997, the company
has built a substantial portfolio of assets in
these areas, comprising almost 50 licences,
18 as operator. With more than 300 staff and
contractors based in London and Aberdeen,
the operator recently underlined its
commitment to the UKCS by taking a 15-year
lease on a new building in Aberdeen which will
be completed in 2014.
GDF SUEZ E&P UK is operator of the Cygnus
development, with partners Centrica and
Bayerngas UK. Cygnus is one of the most
significant undeveloped gas fields in the
southern North Sea (SNS) and the sixth
largest field in the UKCS by remaining gas
reserves. The company is also operator of the
Juliet gas field in the SNS, a subsea tie-back
development with first gas due in late 2013,
and has an exciting portfolio of discoveries
and exploration projects in the central North
Sea and west of Shetland.
5. Case Studies of New Investment:
Cygnus and Montrose-Arbroath Fields
