Partner Article

Oil & Gas Industry Tax Changes

By Bryan Bunn, Managing Director, Nortech Staffing Solutions.

Reports concerning the amount of North Sea oil and gas remaining are conflicting, with industry body Oil and Gas reporting that four fifths have already been used while the Scottish Government states that around half of the reserves have yet to be extracted. As few as 14 billion barrels are left, according to the industry body; news which has in part helped to raise the alarm in UK government circles.

Any moves to safeguard jobs in the oil and gas industry and to encourage in the sector are to be welcomed. Not only will positive measures to protect its future have a positive effect on the industry itself but will also boost its supply chain, and will be good news for those like ourselves who work within the sector, as well as, of course, for the UK economy as a whole.

While the debate about how much of our ‘liquid gold’ remains, measures are afoot to consult the industry on guaranteeing the long-term level of decommissioning tax relief on old offshore oil platforms. Uncertainty surrounds the costs of scrapping these redundant oil platforms and this was in turn hindering future investment. Now, however, is quite clearly the optimum time to act to help to sustain the industry and to protect jobs in the medium to long-term.

Oil and gas is the largest industry sector in the UK and contributes almost a fifth of all corporation tax paid to the UK Treasury and supports more than 400,000 jobs - about half of them in Scotland. I believe that tax changes will help to unlock the future potential of the oil and gas industry and safeguard jobs, which would be fantastic news for the industry as a whole. The move, which is to be welcomed, will help the industry to grow in the face of tough market conditions and dwindling supplies.

As a company that works extensively in the oil and gas sector supply chain, we are well placed to predict the robustness, or otherwise, of the industry and its supply chain.

The consultation on tax changes follows measures outlined in the Budget in March, which would provide the industry with a three billion pound tax break. The measures to help the industry dismantle old platforms would, it is anticipated, trigger £40bn of investment in North Sea Oil by industry giants such as BP. The £3bn investment would allow the industry to drill new oil beds west of Shetland, which are oil-rich.

The move is to be welcomed, as it would help to safeguard the huge number of jobs currently dependant on a healthy industry sector. The tax changes would also be offset by much higher government tax revenues on new supplies, which would also be good news for the UK economy, as a whole.

So, while the debate about the amount of oil and gas remaining rages on, moves to aid the industry are to be welcomed, as they should help to trigger some much-needed investment in the sector. This will, in turn, have a positive knock-on effect for the industry and for the UK economy, as a whole.

An engineering design and project management company, Nortech Solutions has the capabilities to provide a fully integrated technical service through the life cycle of a project from concept through to completion. The company has successfully implemented projects on behalf of a multitude of industrial heavyweights. This year, Bryan Bunn also set up Nortech Staffing, a specialist recruitment company, to service the recruitment requirements of the oil and petrochemical markets, particularly the international offshore oil and gas markets, based in Aberdeen. Its headquarters is based at Wynyard Business Park in the Tees Valley in the North East of England.

This was posted in Bdaily's Members' News section by Nortech Solutions .