Government refuses new North Sea oil tax breaks

Oct 23 2009 2:46PM

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The government has been accused of snubbing the UK's oil and gas sector after deciding that no further tax breaks would be offered to firms looking to spud new wells in the North Sea.

Industry experts had called for improved incentives to develop the small and technically challenging deposits which they believe will help extend the life of the oil and gas sector in the area.

However, the Treasury has decided that appraisal and development in the North Sea "held up quite well" in the first half of this year and as such no additional breaks were needed.

However, Mike Tholen, spokesperson for Oil and Gas UK, disagreed and warned of the consequences of failing to cut the tax burden for exploration and development projects.

He said: "Our security of energy supply, employment and tax revenues will be jeopardised, at vast cost to the nation."

Recently, Sir Ian Wood, chairman of the Wood Group, claimed that tax incentives could boost the value of North Sea oil and gas reserves by as much as £787 billion. ADNFCR-1942-ID-19424170-ADNFCR

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