The Government today announced that North Sea oil and gas firms would receive tax support for those operating smaller, less profitable fields. The announcement follows an earlier tax increase that had some some in the industry worried about about the future of the nation’s energy supply.
The annual rate of the Ring Fence Expenditure Supplement for the North Sea fiscal regime will be increased from 6% to 10%, following discussions with industry initiated at the 2011 Budget.
Justine Greening, Economic Secretary to the Treasury, said: “The Government was clear at the Budget that it would engage with oil and gas companies, including to consider the case for further support for marginal projects. Today’s change demonstrates our commitment to ensure current allowances work effectively and equitably, and lays the groundwork for further constructive discussions on field allowances.”
Norweigian firm Statoil said it would resume preparatory North Sea work previously suspended after the initial tax rise.
The RFES, which was introduced in 2006, assists companies that do not yet have sufficient taxable income for ring fence corporation tax purposes against which to offset their costs.