WIRELINE Issue 35 Spring 2016

ACTIVITY SURVEY 2015 6

“ 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

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.

Watch our short video on the UK Continental Shelf – Current State of Play at www.vimeo.com/156336502.

Download the report at www.oilandgasuk.co.uk/ activitysurvey

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