The oil and gas industry is growing more “confident” the Government values its role in the economy, suggests a new trade body report out yesterday.
More cooperation with the Government has put the industry’s fears at ease, suggests Oil & Gas UK in its 2012 Economic Report, which means it is attracting more money into the country.
The report could be seen as a sigh of relief from a sector which felt hard done by after Chancellor George Osborne slapped taxes of up to 80% on some fields in the North Sea last year.
The UK is the third largest gas and second largest oil producer in Europe and 19th largest in the world for both oil and gas.
Measures in the 2012 Budget went some way to reassure exploration firms – although more could be done, said Malcolm Webb, the trade body’s chief executive.
Mr Webb said: “With up to 24 billion barrels of oil and gas equivalent (boe) remaining to be extracted from beneath our seabed, the industry must and with appropriate targeted incentives, can do more.
“The right tax system… is a crucial driver and on this, there is more to do. While tax allowances have been given to stimulate investment in small, deep and technically challenging fields, attracting investment for the significant volume of brown-field and other reserves that lie ‘fiscally stranded’ is still a challenge.”
The report’s key findings show production from the UK’s continental shelf made up nearly half (49%) of the country’s primary energy demand, while production was an average of 1.8 million boe per day, a drop of around a fifth (19%) from 2010.