Oil & Gas UK have urged the UK Government to reform tax rules surrounding the industry in order to support and maintain future growth.
In their proposals, the body claims that failure to address the challenges facing the sector could result in diminished activity in future years.
At present, the UK oil and gas industry contributes a considerable amount of money to the overall economy with last year’s figures revealing that it was worth £14 billion in total – a contribution which must be preserved in order to safeguard future growth and development.
The importance of fuel
As well as contributing a significant amount of money to the economy, the UK oil and gas sector is also responsible for generating a considerable amount of jobs for British workers – helping to reduce unemployment figures.
It is estimated that as many as 450,000 jobs are supported by the industry which also provides more than £14 billion worth of exported goods and services.
Turnover for the industry is also high with the oil and gas supply chain said to have a combined value of £35 billion.
With such strong performance punctuating the industry, it is clear that Oil & Gas UK’s concerns need to be addressed in order to protect the future of this investment.
Pulling down barriers
Speaking about the tax regulations surrounding the industry, Oil & Gas UK’s chief executive Malcolm Webb explained that swift action needed to be taken.
He described the current fiscal regime as a “barrier to investment” and claimed that members of the organisation should work closely with the treasury to respond to the review and implement swift and early action designed to boost the sector.
These comments were made after the government announced that they would hold a formal consultation into the future of the tax regime which operates with the UK’s oil and gas industry and is particularly focused on the UK Continental Shelf in the North Sea.
North Seas focus
Despite taxation being as much as 81% and exploration at an all time low in the matured UKCS, it continues to have a major impact on the UK economy. Crude oil and gas provide around three quarters of the country's primary energy and will continue to do so in the future according to UK Oil & Gas UK.
Also speaking on the topic, UK Oil & Gas UK Economics Director Michaul Tholen explained, "The current fiscal regime has become increasingly complicated and unpredictable with high tax rates combined with a multiplicity of allowances."
"While targeted allowances have successfully encouraged a wave of activity in recent years, temporarily halting the production decline, their impact is diminishing in an ever more expensive business climate. Investors are increasingly looking to invest elsewhere rather than in the UK."
A story that is sure to rumble on pass the Scottish independence vote and the UK general election next year.
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