The UK oil and gas industry’s economic outlook has revealed rising costs for the sector, prompting calls for the government to provide more tax incentives to retrieve £1 trillion investment and fully exploit the country’s declining offshore reserves.
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The UK’s North Sea oil and gas sector could see a timid rebound after years of decline, according to a report by industry body Oil & Gas UK, but fresh government support is needed in order to exploit the remaining offshore reserves – about 24 billion barrels.
The sector is dealing with operating costs that are 60% higher than three years ago and falling oil prices. The report argues that more help from the government is needed to overcome current challenges and ensure the “long term future of the industry”. Proposed measures include addressing costs and a radical fiscal and regulatory reform.
Oil & Gas UK’s chief executive Malcolm Webb said, “Our industry has a crucial role to play in the future wellbeing of this country.
“However, to support a lasting and sustainable future, today we’re calling for greater collaboration – between governments, between government and industry and within industry itself to face and fight the challenges ahead.
The organisation’s economics director, Michael Tholen added the sector would benefit from “a lighter tax burden, a simpler and more predictable system of field allowances and fiscal support for exploration”.
The revenue of oil reserves in the North Sea was a central issue during the campaign of Scottish referendum. Oil tycoon Sir Ian Wood said that the reserves were greatly overestimated, claiming the industry would “be down to very low levels of production by 2050”.
The report follows an analysis from the International Energy Agency that forecasted massive growth for the solar industry bymid-century, suggesting the sector could soon surpass oil.
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