Oil and gas industry still employing

Oil and Gas UK has said the industry will remain a significant employer despite figures showing offshore tax receipts fell to £35 million in the last financial year.

The industry body urged the sector to continue to reduce operating costs as tax revenues dropped to their lowest since the mid-70s when North Sea production took off.

The latest figures from HM Revenue and Customs show offshore corporation tax raised £538 min the financial year 2015/16, but that was offset by petroleum revenue tax rebates of £503m.

The £35m difference compares with tax revenues of around £2 billion in 2014/15 and almost £11 billion as recently as 2011/12.

UK Chancellor George Osborne announced a series of tax cuts for North Sea oil and gas fields in his March Budget, including effectively abolishing petroleum revenue tax by permanently reducing the rate from 35% to 0%.

But the Office for Budget Responsibility has forecast that receipts will be negative until 2020/21, with repayments expected to be around £1bn higher than payments in each year as operators struggle with the continuing oil price slump.

Mike Tholen, economics director at Oil and Gas UK, said: “At around 40 US dollars (£28) per barrel, oil is still more than 60% lower than it has been over the last three years. In these conditions, the UK North Sea industry will continue to struggle to sustain its current scale.

“More than £330bn in 2014 money has been paid to date on UK oil and gas production, however, HM Treasury has noted that tax take on production will fall in 2015/16 and fall further by 2021.

“Despite the projected fall in production taxes which is a consequence of the current low oil prices, industry will remain a significant employer, provider of energy security, hub of innovation and leader in the export of goods and services to overseas markets.”

Picture: PA. An oil rig in the North Sea.