Britain plans to introduce tax changes to oil and gas companies operating in the North Sea, finance minister Philip Hammond said, in a bid to spur investment in the aging basin.
Presenting Britain’s budget for next year, Hammond said that starting November 2018, tax history for oil and gas fields in the North Sea would be transferable from seller to buyer.
That will allow buyers to benefit from larger tax relief when fields reach the end of their life and require dismantling, known as decommissioning.
Britain’s Oil and Gas Authority forecasts that North Sea oil and gas operators will spend almost $78 billion on decommissioning wells, platforms, pipelines and other infrastructure between now and the 2050s.
Government relief covers about 40% of the total costs.
Legislation on the tax relief will be published in spring 2018 with the aim of making transferrable tax histories available from Nov. 1, 2018, according to the proposed budget.
The North Sea has seen a flurry of deals in recent months, including Royal Dutch Shell’s $3.8 billion sale of assets to private-equity backed Chrysaor, as longstanding operators make way for a new generation of smaller firms focused on squeezing more profit from old assets.
Decommissioning remains a sticking point in many of the negotiations as the original operator of a North Sea field retains ultimate responsibility for its dismantling.
As a result, companies such as Shell or BP agreed in some cases to share part of future decommissioning liabilities in deals in recent years.
The announcement was welcomed by industry players.
Delays are an attempt to force Russia to the negotiating table with Ukraine on gas transit.
Request could delay the Russian project to pump natural gas to Europe.
The 765 miles of pipeline, now under construction, has come under fire from the United States and several eastern European, Nordic and Baltic Sea countries which fear it will increase the European Union's reliance on Russian gas.