Oil & Gas UK Economic Report 2015

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ECONOMIC REPORT 2015 33
Over recent years, there has been considerable
deliberation about whether the domestic offshore oil
and gas sector’s full economic contribution to the UK is
properly understood. It is now accepted that the total
value added (TVA) from the UKCS derives as much from
the indigenous supply chain that has developed over
the last five decades as it does from the UKCS’ direct
outputs. If domestic offshore oil and gas extraction
were to cease overnight, then the economy would be
diminished by the loss of direct oil and gas output as
well as the activity underpinned by service industries
supporting the sector.
There is, however, no single measure that reflects the
sector’s TVA. Industrial and fiscal policy has nonetheless
begun to reflect the sector’s wider value proposition. In
the recent reforms of oil and gas production taxation,
HM Treasury has explicitly stated that “when making
judgements about fiscal policy, the government will
consider the wider economic benefits of oil and gas
production, in addition to (fiscal) revenues”5.
UKCS
TVA
Profitability
Energy
Security
Fiscal
Contribution
Employment
Supply
Chain
Gross Value
Added
Source: Oil & Gas UK
Figure 17: Total Value Added from the UKCS
6. Economic Contribution
5 Driving Investment: a Plan to Reform the Oil and Gas Fiscal Regimefrom HM Treasury is available to download at
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