UK Budget: Decom Tax Relief Welcomed by Oil, Gas Sector

Measures announced by the UK Chancellor in his 2013 Budget to guarantee tax relief on the decommissioning of oilfields on the UK Continental Shelf have been welcomed by the UK oil industry.

Oil & Gas UK Chief Executive Malcolm Webb commented in a statement:

"The industry has been working closely with the Treasury since the 2011 Budget to resolve the long-standing problem of uncertainty on decommissioning tax relief. The measures announced today will for the first time ever give companies the certainty they need over the tax treatment of decommissioning.

"At no cost to the Government, it will speed up asset sales and free up capital for companies to use for investment, extending the productive life of the UK continental shelf."

Decom North Sea (DNS), a forum specializing in UK decommissioning, said the new measures will boost the sector by giving increased certainty, in turn leading to new jobs and investment in new technology. DNS pointed out that decommissioning expenditure in the North Sea is forecast to top $1.5 billion (GBP 1 billion) within a few years.

"The Chancellor's confirmation of tax relief through Decommissioning Relief Deeds will help ease one of the greatest concerns facing the North Sea industry and lead to investment and ultimately more jobs," DNS Chief Executive Brian Nixon said.

"Once assets have been recognized as nearing the end of their economic lives, we believe the Budget will lead to operators being able to move forward with their decommissioning plans, which will in turn help to reassure the hundreds of supply chain companies and encourage them to consider investment in new equipment or tooling or to attract new staff."

Meanwhile, Derek Leith – head of oil and gas taxation at Ernst & Young in Aberdeen, Scotland – pointed out that the announcement would act as a gateway to greater investment in the North Sea, creating an active market that is attractive to companies across the oil and gas industry, from super majors to niche operators.

"Cementing the promise of contracts that guarantee tax relief on costs associated with deactivating and dismantling oilfields during the lifetime of this, and future parliaments, removes another layer of fiscal uncertainty from the UK Continental Shelf and should facilitate the transfer of assets," Leith said.

"Smaller companies that had previously been priced out of potential deals will now be in a position to maximise recovery from existing infrastructure, while larger players will be able to free up capital to fund further exploration and production."

In his Budget, the Chancellor also announced that he would introduce a "generous" new tax regime designed to stimulate early investment in the UK's burgeoning shale gas sector.

The new shale gas tax regime will include a field allowance. Meanwhile, new planning guidance on shale gas projects, along with specific proposals to help local communities to benefit from shale drilling, would follow later in 2013, he said.

"Shale gas is part of the future and we will make it happen," Osborne said in his Budget statement to Parliament.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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UK Budget: Decom Tax Relief Welcomed by Oil, Gas Sector

Measures announced by the UK Chancellor in his 2013 Budget to guarantee tax relief on the decommissioning of oilfields on the UK Continental Shelf have been welcomed by the UK oil industry.

Oil & Gas UK Chief Executive Malcolm Webb commented in a statement:

"The industry has been working closely with the Treasury since the 2011 Budget to resolve the long-standing problem of uncertainty on decommissioning tax relief. The measures announced today will for the first time ever give companies the certainty they need over the tax treatment of decommissioning.

"At no cost to the Government, it will speed up asset sales and free up capital for companies to use for investment, extending the productive life of the UK continental shelf."

Decom North Sea (DNS), a forum specializing in UK decommissioning, said the new measures will boost the sector by giving increased certainty, in turn leading to new jobs and investment in new technology. DNS pointed out that decommissioning expenditure in the North Sea is forecast to top $1.5 billion (GBP 1 billion) within a few years.

"The Chancellor's confirmation of tax relief through Decommissioning Relief Deeds will help ease one of the greatest concerns facing the North Sea industry and lead to investment and ultimately more jobs," DNS Chief Executive Brian Nixon said.

"Once assets have been recognized as nearing the end of their economic lives, we believe the Budget will lead to operators being able to move forward with their decommissioning plans, which will in turn help to reassure the hundreds of supply chain companies and encourage them to consider investment in new equipment or tooling or to attract new staff."

Meanwhile, Derek Leith – head of oil and gas taxation at Ernst & Young in Aberdeen, Scotland – pointed out that the announcement would act as a gateway to greater investment in the North Sea, creating an active market that is attractive to companies across the oil and gas industry, from super majors to niche operators.

"Cementing the promise of contracts that guarantee tax relief on costs associated with deactivating and dismantling oilfields during the lifetime of this, and future parliaments, removes another layer of fiscal uncertainty from the UK Continental Shelf and should facilitate the transfer of assets," Leith said.

"Smaller companies that had previously been priced out of potential deals will now be in a position to maximise recovery from existing infrastructure, while larger players will be able to free up capital to fund further exploration and production."

In his Budget, the Chancellor also announced that he would introduce a "generous" new tax regime designed to stimulate early investment in the UK's burgeoning shale gas sector.

The new shale gas tax regime will include a field allowance. Meanwhile, new planning guidance on shale gas projects, along with specific proposals to help local communities to benefit from shale drilling, would follow later in 2013, he said.

"Shale gas is part of the future and we will make it happen," Osborne said in his Budget statement to Parliament.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

UK Budget: Decom Tax Relief Welcomed by Oil, Gas Sector

Measures announced by the UK Chancellor in his 2013 Budget to guarantee tax relief on the decommissioning of oilfields on the UK Continental Shelf have been welcomed by the UK oil industry.

Oil & Gas UK Chief Executive Malcolm Webb commented in a statement:

"The industry has been working closely with the Treasury since the 2011 Budget to resolve the long-standing problem of uncertainty on decommissioning tax relief. The measures announced today will for the first time ever give companies the certainty they need over the tax treatment of decommissioning.

"At no cost to the Government, it will speed up asset sales and free up capital for companies to use for investment, extending the productive life of the UK continental shelf."

Decom North Sea (DNS), a forum specializing in UK decommissioning, said the new measures will boost the sector by giving increased certainty, in turn leading to new jobs and investment in new technology. DNS pointed out that decommissioning expenditure in the North Sea is forecast to top $1.5 billion (GBP 1 billion) within a few years.

"The Chancellor's confirmation of tax relief through Decommissioning Relief Deeds will help ease one of the greatest concerns facing the North Sea industry and lead to investment and ultimately more jobs," DNS Chief Executive Brian Nixon said.

"Once assets have been recognized as nearing the end of their economic lives, we believe the Budget will lead to operators being able to move forward with their decommissioning plans, which will in turn help to reassure the hundreds of supply chain companies and encourage them to consider investment in new equipment or tooling or to attract new staff."

Meanwhile, Derek Leith – head of oil and gas taxation at Ernst & Young in Aberdeen, Scotland – pointed out that the announcement would act as a gateway to greater investment in the North Sea, creating an active market that is attractive to companies across the oil and gas industry, from super majors to niche operators.

"Cementing the promise of contracts that guarantee tax relief on costs associated with deactivating and dismantling oilfields during the lifetime of this, and future parliaments, removes another layer of fiscal uncertainty from the UK Continental Shelf and should facilitate the transfer of assets," Leith said.

"Smaller companies that had previously been priced out of potential deals will now be in a position to maximise recovery from existing infrastructure, while larger players will be able to free up capital to fund further exploration and production."

In his Budget, the Chancellor also announced that he would introduce a "generous" new tax regime designed to stimulate early investment in the UK's burgeoning shale gas sector.

The new shale gas tax regime will include a field allowance. Meanwhile, new planning guidance on shale gas projects, along with specific proposals to help local communities to benefit from shale drilling, would follow later in 2013, he said.

"Shale gas is part of the future and we will make it happen," Osborne said in his Budget statement to Parliament.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Dismissal of Frade Oil Spill Charges 'Welcomed News'

Drilling contractor Transocean Ltd. welcomed news that a Brazilian court has dismissed charges against the company and employees over the 2011 Frade oil spill offshore Brazil.

Transocean's crew members did exactly what they were trained to do, "acting responsibly, appropriately and quickly while always maintaining safety as their top priority," Transocean spokesperson Guy Cantwell told Rigzone.

Charges were also dismissed against Chevron Corp., according to a Reuters news report.

Chevron was drilling an appraisal well at the Frade field in November 2011 when oil began seeping through seep lines on the ocean floor. Chevron cemented and plugged the well, estimating that between 400 and 650 barrels of oil were spilled. A lawsuit was filed against the two companies by a federal district attorney in Brazil seeking $10.7 billion (BRL 20 billion) in damages and an injunction to halt Chevron's operations in Brazil.

Operations at the field have been suspended since March 2012, when Chevron requested a temporary suspension of production operations after identifying a small new seep at the field. In July of last year, Brazil oil regulatory agency said it had no objections to the company restarting production, Dow Jones Newswires reported.

However, a Brazilian court in August gave both companies 30 days to cease operations in Brazil, according to a Dow Jones newswire report.

The head of Brazil's superior court of justice overturned a lower court ruling that allowed Transocean to continue operations in Brazil, except at the Frade field, Dow Jones Newswires reported in October 2012.

Brazil's National Petroleum Agency (ANP) had appealed the ban on Chevron and Transocean operating in Brazil, saying that forcing the companies to cease operations could cause serious safety problems and great economic harm, according to Dow Jones Newswires reports.

Brazilian state energy company Petroleo Brasileiro SA (Petrobras) also sought to help overturn the ban on Transocean because it would hurt the company's operations.

In September, ANP fined Chevron $17.3 million (35.1 million Brazilian reais) for its role in the offshore oil spill.

Chevron's plan of development for Frade called subsea production wells tied back to a floating production, storage and offloading vessel. Field development cost of the Frade field is estimated at $2.8 billion.

Located offshore Brazil in the northern Campos Basin in 3,722 feet of water, Frade contains heavy oil and natural gas, with recoverable reserves estimated at 200 to 300 million barrels of oil.

Chevron is operator of the field with 51.7 percent interest. Partners include Brazilian state energy company Petrobras with 30 percent and Frade Japao Limitada, a Japanese partnership led by Inpex Corp. with 18.26 percent.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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