The tax facing the oil and gas industry isa huge blow to the oil industry and can only reduce the chance of investment.
These were the words of Andrew Lister, a partner from KPMG Energy and Natural Resources practice, whoadded: “The potential for the tax rate to be reduced if the oil price falls will be of no consolation to the UK’s oil and gas producers and offshore service companies.”
Following yesterdays announcement by Chancellor George Osborne that a £2 billion “fair fuel stabiliser” would be imposed on oil and gas companies, those in the industry showed concern that the move would cost the UK jobs.
Malcolm Webb, Chief Executive at Oil & Gas UK, said: “The Budget runs counter to the Government’s stated desire to promote growth, jobs and exports – all of which this industry was delivering and will now find much more difficult to sustain. This further shock will only damage investor confidence and make many question whether the UK is an appropriate destination for their investment.
“Importantly it will also most likely increase this country’s dependence on imported oil and gas and thus diminish its energy security.”
According to Oil and Gas UK, the UK offshore industry currently accounts for a third of total industrial investment in this country and supports nearly half a million jobs.
The £2 billion tax on oil and gas production was brought in after a surge in global oil prices. According to the Chancellor if oil prices fall then a ‘fuel duty escalator’ would be reintroduced and the new oil tax would go.