TaxCorporate TaxBrown ponders North Sea oil tax breaks

Brown ponders North Sea oil tax breaks

Chancellor Gordon Brown is considering a targeted tax concession designed to kickstart drilling activity in the North Sea oil and gas industry.

Link: More pressure on Brown over oil taxes

Energy minister Stephen Timms signalled a decision would be announced ‘in due course’ during a Commons Westminster Hall debate on the collapse of drilling activity offshore – only 16 exploratory wells were sunk last year and only 16 so far this year.

Timms revealed there have been talks about the crisis between the industry, the Inland Revenue and the Treasury.

During Treasury Questions later in the Commons, paymaster general Dawn Primarolo said consultations on whether there were cost effective measures that could be taken to improve the situation, had ended.

She said evidence, which had been taken from representatives across industry, would be studied by a joint working group.

MPs have been concerned that smaller companies wishing to explore and develop the North Sea, cannot make use of existing tax reliefs because they have no profits against which to set the cost of sinking exploratory wells.

The industry itself is split, with existing oil majors like BP in favour of action to ensure further exploitation of existing ‘brownfield’ sites instead.

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