Huge investment made possible by UK oil and gas tax regime.
The UK’s largest independent oil company, EnQuest, has announced a £4bn investment in the North Sea’s Kraken oil field development. Of the £4bn investment, 80% is expected to be spent in the UK, and will create around 20,000 jobs during the construction period and an average of approximately 1,000 operational jobs a year. This will also impact both EnQuest directly and supplier companies (such as engineering and drilling companies) that will work with EnQuest over the next 25 years.
The investment was made possible by government tax relief through the ultra heavy oil field allowance which allows companies to claim tax relief on up to £800m of their profits. EnQuest are investing in two heavy oil fields, and so will be entitled to an allowance for each.
Chancellor of the Exchequer, George Osborne said:
This is a big investment that will create jobs and boost the British economic plan. It is also evidence that our efforts to create a competitive tax regime that gets the most oil and gas out of the North Sea are working.
The project – one of the largest to be announced this year – is expected to produce around 140 million barrels of oil over its 25 year life. EnQuest expect to begin oil production in 2017.
Photo courtesy of Graeme Darbyshire on Flickr – used under Creative Commons