Announcements of BP’s intended sale of its North Sea Bruce assets to Serica Energy plc and the move by Ineos to explore for gas in waters to the far north of Shetland have been welcomed by trade body Oil & Gas UK as marking a day of ‘good news’ for the North Sea. Contributor Deirdre Michie, Chief Executive – Industry Trade Association.
Commenting on today’s developments, Deirdre Michie, chief executive at the industry trade association, said: “Following hard on the heels of recent merger and acquisition activity, today’s announcements are very good news indeed for the UK’s offshore oil and gas sector. After three difficult years, they reinforce the gathering strength of belief in the future of the UK North Sea as we move slowly out of the downturn caused by the oil price slump.
“We believe there are up to 20 billion barrels of oil and gas still to recover from Britain’s offshore regions. Today’s announcements will bolster the industry’s efforts to maximise recovery of a vital primary resource which helps to meet the country’s energy needs, secure jobs and generate wealth for the economy. They will also act as catalysts for fresh investment, reinvigorating activity in both new and existing portfolios and generating orders for companies in the UK’s world-class oil and gas supply chain.
“The complexity of deals like the BP Serica one announced today is indicative of the effort the industry has to make to ensure that the right assets are in the right hands for further development and extending field life. This potential route for attracting fresh investment into existing fields is currently hampered by legislation which prevents the transfer of tax histories (TTH) with the sale of assets. This means that new owners are not able to offset future decommissioning costs against historical production taxes paid.
“Treasury have previously consulted on the benefits of enabling TTH. This is a textbook example of the need for TTH which we believe would make deal- making simpler and quicker, helping to unlock new investment in the basin. We are hopeful of it being included as a measure in the Budget.”