Proposals for a North Sea investment allowance
Scottish Government responds to the UK consultation on investment allowance.
In its response to the UK Government consultation on an investment for the oil and gas sector – which closed yesterday - the Scottish Government has called for a fiscal regime that is underpinned by the principles of simplicity, stability and flexibility, Energy Minister Fergus Ewing said.
The Scottish Government response outlines proposals for a well-designed investment allowance that would simplify the fiscal regime and signal to global investors that the North Sea is open for business. The Scottish Government has long been calling for reforms to the oil and gas fiscal regime – including the introduction of a basin-wide investment allowance.
Mr Ewing said:
“The oil and gas industry makes a substantial contribution to the Scottish economy and the UK public finances. However, it is increasingly clear that the oil and gas fiscal regime has become overly complex, burdensome and uncompetitive.
“In order to maintain production at current levels, or to increase it, exploration levels must improve and long-term investment must be sustained to ensure that sufficient new production comes on stream. This should help to protect future tax receipts and ensure a fair return to the nation.
“The Scottish Government has set out proposals for the introduction and operation of an investment allowance that focuses on the principle goals of boosting investment and simplifying the fiscal regime. The paper also outlines how a well-designed investment allowance could help to address many of the underlying challenges in the North Sea, such as declining exploration activity and low production efficiency.
“The UK Government must listen to feedback from industry and stakeholders and bring forward an effective investment allowance at the March Budget.
“While the introduction of an investment allowance will send an important signal to investors, this must not be positioned as an alternative to the substantial action that is needed across a number of areas.
“With lower prospectivity than many other global regions and pressure to tackle the high cost environment in the basin, the Scottish Government is clear that in order to maximise economic recovery, and the Total Value Added by the sector to the economy, wider fiscal and regulatory reform must continue to be progressed with urgency.”
Notes To Editors
A full copy of the response to the Fiscal reform of the UK Continental Shelf: consultation on an investment allowance.
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