The confidence of Britain’s oil and gas industry is increasing steadily, which could be down to the tax changes announced by the Government last year.
Oil & Gas UK, the trade body for the UK offshore industry, revealed the sector scored 60 out of 100 in the final quarter of 2012 in its ‘Business Confidence Index’.
It follows the Treasury’s tax measure called the ‘Brown Field Allowance’ announced last year to support investment in the North Sea. Chancellor George Osbrone said it would help save up to £500 million for some projects, potentially cutting companies’ tax bill by £160 million.
The report suggested that while the confidence of operators has remained steady but unchanged since the last quarter at 57 points, it is the contractors who are driving the rise in optimism.
Oonagh Werngren, Oil & Gas UK’s Operations Director said: “The rising confidence within the contractor sector suggests that the tax changes introduced by the Government last year to incentivise investment in the UK continental shelf are now bearing fruit. With operators investing around £11.4 billion in 2012, supply chain companies which perform essential functions supplying parts and specialist services and equipment to the operators are experiencing increasing demand for their services.”
The report also revealed confidence in the marine and subsea sector is rising most significantly, closely followed by facilities engineering, operations and maintenance. In the operators’ sector, it is only major firms that have shown increased confidence due to the availability of resources and benefits of tax changes while smaller operators are finding access to finance and resources such as drilling rigs are constraining their growth.