WIRELINE Issue 35 Spring 2016

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W I R E L I N E - I S S U E 3 5 S P R I N G 2 0 1 6 1 7
ACTIVITY SURVEY 20156
The significant reduction in the volume of
reserves that companies are considering
for production, compared with last year’s
survey, reinforces the urgency of boosting
competitiveness and restoring investor
confidence. It is in the full economic
interest of the UK that we bridge the gap
between the oil and gas reserves currently
in company plans and the estimated
20 billion boe that still remain to be
extracted.
Q: Does the tax reduction
announced in the 2016 Budget
have much effect on the industry’s
prospects?
A: The Budget has reduced the
headline rate of tax paid on UK oil
and gas production profits from the
beginning of this year. This falls
from 50-67.5 per cent to a rate of
40 per cent across all fields. We
welcome that decisive action from
the Chancellor as acknowledgment
of the challenges facing the industry.
Oil & Gas UK has been calling
on the government to support the
competitiveness of UK oil and gas
production and lighten the burden of
special taxes paid by the sector. We
saw the Budget as an indication that
the government has been listening
and is prepared to act constructively
to protect this important sector.
While it will take time for the impact
of a lightened tax rate to benefit
upstream cash flows – coupled with
the improvements in efficiency and cost
– it puts this sector in a much more
competitive shape for the future.
Our next steps will be to continue to
work with the Treasury to complete its
‘Driving Investment’ plan and ensure
that the fiscal regime reflects the
business needs of the UKCS and sends
a strong signal that the UK is open for
business.
“It is in the full economic interest of the
UK that we bridge the gap between the
oil and gas reserves currently in company
plans and the estimated 20 billion boe that
still remain to be extracted. ”
Q&A