Britain's oil and gas industry is warning that, unless activity can be stimulated through improved tax breaks, the UK will miss the government’s North Sea production targets, resulting in more fuel imports, higher energy costs and lower tax revenues.

Industry body Oil & Gas UK said the latest forecasts suggested there would be a 20% shortfall on a government target of 3m barrels by 2010. The new level is likely to be closer to 2.4m barrels, according to The Guardian.

‘It must be recognised that, even in the current price environment, the tax regime continues to have an impact on long-term investment confidence,’ Malcolm Webb, chief executive of Oil & Gas UK, said at the release of the organisation’s 2007 Activity Survey. ‘The primary challenge facing industry, regulators and government now is to ensure that the UK remains globally competitive, enabling it to attract the required investment in future and keep the supply chain engaged on the UK (Continental Shelf),’

Another newly released report by PricewaterhouseCoopers shows energy and banking companies were responsible for almost three-quarters of the £12.8bn of corporation tax paid by 74 of UK's biggest companies in 2007.

Further reading:

Oil, gas M&A undeterred by credit crunch

Oil and gas companies get tax concessions

Read story in The Guardian