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9.2. Major Challenges andSuggestedActions
Although there is optimism for the future, there are a number of challenges facing thewell services contractor
sector and theUKoffshoreoil andgas industryas awhole.
Increasingoperatingcostsareseenasakeychallenge.The
Oil&GasUKActivitySurvey2014
7
revealsthatoperating
expenditure on theUKCS increased by 15.5 per cent in 2013, with a further increase of 7.9 per cent forecast for
2014; a trendwhich isbelieved tobeunsustainable in the long term.
The new consultation with HM Treasury on an ultra high pressure high temperature (uHPHT) tax allowance is
welcomedby thewell services contractors,with theexpectation that thismeasurewill stimulatenew investment
in uHPHT developments. It has also been suggested that tax benefits for the development of new technology
wouldhavea significant benefit indrivingefficiencies throughout the industry.
However, the announcement of the bareboat charter tax measure, which is expected to significantly increase
operatingcostson theUKCS, isa factor that isdampeningoptimismwithin thesector. Thewell servicescompanies
welcome the announcement in the 2014 Budget that theUKGovernment will conduct a full review of the fiscal
regimeof theUKCS.
The full implementationof the
WoodReview
8
isalsoconsideredpivotal inensuring the futureof theUKCS. Anew,
strongand fully resourced regulatorybodyhasbeenwelcomedby the sector, in thehope that thiswill encourage
new investmenton theUKCS, stimulatedrillingactivityandenforcegreatercollaboration throughout the industry.
It is also hoped that greater improvements in efficiency and opportunities for collaboration, in addition to
alignmentof objectives throughout the industry, canbeachieved through improving theeffectivenessof industry
initiatives andorganisations.
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Oil&GasUK’sActivity Survey2014
is available todownloadat
8
TheWoodReview
‘UKCSMaximisingEconomicRecovery: Final Report’
is available todownloadat
