Dundeecom chief hopes new rules will bring more players

Changes to tax rules on the way older oil and gas fields can be transferred to new investors could lead to more decommissioning players entering the market, the chief executive of Dundeecom said last night.

Callum Falconer, who is leading Dundee’s bid to become a decommission hub, welcomed the Petroleum Revenue Tax rules being amended.

The chancellor also pledged to launch a call for evidence and work with the Oil and Gas Authority (OGA) to identify what more can be done to make Scotland and the rest of the UK more attractive as a decom destination.

Mr Falconer said: “The introduction of tax transfer, not ring-fenced to their producing fields, will trigger the sale of assets to smaller, more agile owners.

“Hopefully, the new owners will have less onerous and more open-minded procurement and contractual processes that could stimulate the emergence of lower-cost decommissioning players into the industry.”

Mr Falconer said there were currently too many government agencies in the decom sector with “their own agendas” and that a government-OGA led review would have to focus the different groups to “achievable goals and common success factors”.

“This lack of joined-up thinking is unlikely to lead to the development of a successful global business,” he added.

Philip Hammond said maintaining the current headline tax rate would help the oil and gas industry continue its recovery from the 2014 oil price crash, protect jobs, and ensure the UK is attractive for new investment, whilst giving the nation a fair return for its natural resources.

As announced in last year’s Autumn Budget, the government will introduce a transferable tax history mechanism in the Finance Bill 2018-19 for oil and gas companies that will remove tax barriers to new investment in the North Sea.

Oil & Gas UK chief executive Deirdre Michie said: “With reduced costs, competitive fiscal terms and improved operational performance, the UK Continental Shelf is becoming an attractive investment proposition.

“These conditions are delivering a tentative recovery, with more projects approved so far this year than in the last three years combined.

“It’s important that this stability is sustained for the longer term, encouraging further investment and much-needed new business for the supply chain, which continues to be under pressure.

“The UK’s offshore oil and gas industry will continue to play a vital role in the economy for many years to come.”