North Sea oil investment at 30-year high, industry says
- 25 February 2013
- From the section Business
Investment in the North Sea is the highest for 30 years and rising, according to a report by an oil and gas trade body.
Companies looking for offshore energy invested £11.4bn in 2012, said Oil and Gas UK, which comprises more than 320 companies active in the area.
That will rise to £13bn this year, it predicted.
It credited the recent introduction of tax relief to encourage investment in "difficult projects".
"Here is some really good news for the UK," said Malcolm Webb, Oil and Gas UK's chief executive. "After two disappointing years brought about by tax uncertainty and consequent low investment, the UK continental shelf is now benefitting from record investment in new developments and in existing assets and infrastructure, the strongest for more than three decades."
Chancellor George Osborne passed new relief measures last year so that gas fields in shallow waters will be exempt from a 32% tax on the first £500m of income. The UK government also plans to change tax rules on decommissioning.
"The recent introduction of targeted tax allowances to promote the development of a range of difficult projects, coupled with the government's ground-breaking commitment to provide certainty on decommissioning tax relief, has prompted global companies and independent businesses alike to take another look at the UK as an investment destination," Mr Webb said.
'New discoveries needed'
The number of projects submitted to the Department of Energy and Climate Change and given development approval almost doubled between 2011 and 2012. Thirty-three have been approved since January 2012.
But the body warned that the reserves that are now moving through into production have not been fully replaced with new discoveries.
Production in the UK fell to the equivalent of 1.55 million barrels of oil per day in 2012, down by 14% from 2011 and by 30% from 2010.
Mr Webb added: "Only 21 exploration wells per year on average were drilled over the last three years. As a result, in 2012 not enough barrels were discovered to replace all those produced.
"However, again, there is real cause for encouragement as the survey results lead us to forecast 130 exploration wells over the next three years which, alongside the use of new and improved sub-surface technology, should result in many more barrels being discovered."
According to the Scottish government, there are still 24 billion barrels of oil still to be recovered in the North Sea with a wholesale value of £1.5 trillion.