Norwegian-style tax breaks for oil exploration would help Britain’s ageing North Sea oil industry stave off decline, according to industry leaders.
UK oil and gas production has fallen by two thirds since the year 2000, with particularly steep drops in 2012 (14.5%) and 2011 (18%).
Investment and production are set to pick up over the next three years, but experts argue that long-term sustainability of exploration in the North Sea will require a flexible tax regime.
Lindsay Wexelstein, analyst at energy consultancy Wood Mackenzie, said: ‘At the moment we don’t see this level of investment carrying on post-2016. For spend to be at the level it is now, we do need to see more exploration success.’
Oil & Gas UK estimates that between three billion and nine billion barrels of oil have yet to be found off Britain. Small operators want a tax-based exploration incentive to help with new finds.
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