26.02.10 Tax breaks to encourange offshore exploration
Alistair Darling has just announced a tax break for energy companies involved in oil and gas exploration in the North Sea. The industry has been reluctant to search for Britain’s remaining oil and gas supplies, and this move is expected to provide them with a friendly shove.
The Chancellor has announced £160 million in tax relief for each field to the west of Shetland. This huge incentive could lead to investment in the region of £14 billion, not to mention the creation of a possible 600 new jobs.
It is thought that the stormy seas off Shetland hold about one fifth of the remaining UK oil and gas reserves. But the waters here are some of the most hostile in the world, and so the 170,000-square-mile area has yet to be explored properly. The encouragement needs to come from somewhere, and it has been decided that tax breaks are the way forward.
The government is hoping to push through the legislation quickly, by the end of March at the latest, so that everything is in place in time for the upcoming general election. This will prevent further time being wasted and shows just how seriously the government is taking the issue.
It is estimated that the UK has £750 billion in revenues locked up under the sea that will go to waste unless the government does something to encourage the exploration firms.
The Chancellor said that the tax breaks provided a “significant boost to the industry” and a “major step forward”. The Scottish Secretary, Jim Murphy, said that it will “improve security of supply, sustain jobs, encourage investment and build skills”.
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