The UK government will keep oil and gas taxes at their current level to support the industry and" help the oil and gas industry continue its recovery from the 2014 oil price crash, protect jobs, and ensure the UK is attractive for new investment, whilst giving the nation a fair return for its natural resources."
In the 2018/19 budget, released on Tuesday, the government also lays out plans to give decommissioning of offshore platforms a boost by working together with the national industry regulator, the Oil and Gas Authority. The aim, the document said, was to strengthen the position of Scotland and the UK as a whole as a "global decommissioning hub."
The North Sea, where the UK's oil and gas industry is concentrated, has been attracting a lot of new investments lately: spending on new oil and gas developments the area have reached US$3.87 billion (3 billion pounds) since the start of 2018, the highest since 2015. This compares with less than US$644 million (500 million pounds) invested in new North Sea oil and gas projects in both 2017 and 2016, according to an FT report from earlier this month.
Besides the favorable tax regime approved by the UK government earlier, there were reports of a possible support package worth more than US$1 trillion, to be distributed over the next 17 years, to support an industry that is facing natural field depletion and not insubstantial decommissioning costs, estimated by University of Aberdeen researchers at some US$68 billion until 2030.
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A recent study from the University of Aberdeen has estimated there may be between 15 and 17 billion barrels of oil equivalent still to be pumped from the North Sea over the next three decades, although overall production is set for a steady decline. These billions of barrels, however, would only be recoverable if prices behave and do not fall below US$60 a barrel.
While the intention to provide support to the UK oil and gas industry was made clear in the 2018/19 budget, the document nowhere mentions renewable energy despite much talk about the importance of giving a push to the renewable energy industry as well.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More