UK decommissioning relief details welcomed

Oil & Gas UK welcomed publication by the UK Treasury of details of agreements between the government and oil and gas operators covering tax relief for decommissioning offshore facilities.

The possibility of limits on deductibility of decommissioning costs arose in a tax increase announced early in 2011 and was a major point of industry criticism of the move (OGJ Online, Mar. 25, 2011).

Since then, the government has taken steps to restore incentives for oil and gas development in mature and challenging areas and in a budget announcement last March committed to restoring certainty about decommissioning relief (OGJ Online, Mar. 23, 2011).

Mike Tholen, Oil & Gas UK economics and commercial director, said the newly published details on decommissioning will help operators make investment decisions.

“Long-term certainty on decommissioning relief will, at no cost to government, facilitate the sale of assets to companies most suited to invest in them, provide renewed confidence for late life investment by current and new owners, and liberate new funds for use in extending the productive lives of many mature fields,” he said.

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