According to UK media reports, in order to stimulate investment, attract UK immigrant investors, mitigate the impact of the oil price crash on oil and gas producers, and promote the healthy development of the oil and gas industry, the UK has announced tax cuts for the North Sea oil and gas sector.
The budget released by UK Chancellor of the Exchequer George Osborne shows that the supplementary tax rate for the oil and gas industry will be reduced from 20% to 10%, and the previously high 35% petroleum revenue tax will be completely abolished. These measures will be retroactive to January 1, 2016.
This decision has been warmly welcomed by oil and gas producers in the North Sea region. Oil prices have fallen by more than 60% since mid-2014, forcing producers to tighten their spending.
Oil & Gas UK previously warned that capital expenditure in the North Sea region would decrease by 22% in 2016, and some oil and gas producers might even suspend projects to save funds. A real risk facing oil fields is stagnant production and difficulty in launching new projects, which could lead to the loss of thousands of technical jobs, billions of pounds in tax revenue, and even threaten the UK's energy security.