Oil & Gas UK has welcomed the announcement that today (July 23) the government has published a consultation on a new cluster area allowance to support investment in ultra high pressure, high temperature (uHPHT) oil and gas fields.
Michael Tholen, Oil & Gas UK’s economics director, said:
“We welcome the announcement by HM Treasury that they have opened a formal consultation on how best to incentivise exploration and investment in the ultra high pressure, high temperature (uHPHT) opportunities on the UK Continental Shelf (UKCS).
“Experience shows, uHPHT fields are technically demanding and commercially difficult to develop, the current tax regime is seen by all to be a barrier to investment. The government will need to work closely with industry to develop a simple allowance which promotes investment in uHPHT, encourages exploration of the surrounding area to fully utilise the potential of any resulting new infrastructure; a complex solution could lead to the wrong outcome.
“The Chancellor has recently launched a separate consultation into the overall fiscal regime for the UKCS and the uHPHT consultation should be seen in the wider context, a fundamental recalibration of the fiscal regime is essential if we are to build on Sir Ian Wood’s recommendations to maximise economic recovery and send a strong signal that the UKCS is open for investment.”