The Secretary of State for Scotland Michael Moore today welcomed the UK Government’s announcement of support for the oil and gas industry.
The Treasury is to extend the ring fence expenditure supplement (RFES) from 6% to 10% to help producers operating in marginal, less profitable fields following discussions with the sector. It is aimed at firms which do not make enough income to offset their exploration costs against corporation tax. The RFES currently allows companies to elect to increase the value of losses carried forward from one period to the next by 6% for a maximum of 6 years, not necessarily consecutively.
It will cost the Treasury around £50 million by the end of the 2015/16 fiscal year.
At the Budget, the Government announced: “Recognising the importance of continued investment in the North Sea, including in marginal gas fields, the Government will also consider with the industry the case for introducing a new category of field that would qualify for field allowance.” Today’s announcement reflects the progress made so far in these discussions, and the Government will continue to engage closely with the oil and gas sector to consider the case for further support.
As part of a package of measures to help motorists cope with high petrol prices, the Government announced a Fair Fuel Stabiliser in the last Budget that would be funded by higher taxation of the profits from oil and gas companies when oil prices are high.
Michael Moore said: “The Government has taken a positive step for the future of oil and gas exploration today and is acting on the pledges it made at the time of the last Budget. Support for the sector is important and this will help marginal fields by creating wider, fairer and more effective field allowances. We are going to continue to listen and work closely with the oil and gas companies to find ways to continue our support for the industry.”