Andrew Lister, energy tax partner at KPMG, commented:
“The oil & gas industry in the North Sea – having endured the shock tax announced in the Budget two years ago – will welcome the announcements on decommissioning certainty, which should support extraction of the UK’s precious oil resources to the tune of billions.
“Certainty on tax relief for decommissioning costs will encourage companies to invest in the North Sea as the proposals should provide the assurance companies have been wanting on the availability of tax deductions. The proposals are also designed to allow the tax effect of decommissioning costs to be sufficiently certain to allow companies to move to a post tax calculation in field security agreements. With hundreds of such agreements in the North Sea it will take many months to understand whether the proposals have had the desired result of freeing up capital and making late life assets more attractive for new investors.”
In terms of measures announced on shale gas, Emma Wild, oil & gas director at KPMG, added:
“Shale gas, with the right government support and investment, could become an important contributor to the UK energy mix in the long term. However, it is still unlikely the UK will enjoy a US-style shale gas boom. The announcements that consultation continues on fiscal support for shale gas will be seen as further evidence of government support. The industry will no doubt lobby hard during the consultation in anticipation of legislation promised for the 2014 Finance Bill.”
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About KPMG:
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
