By IRNA,
London : Britain’s oil industry is seeking new tax concessions to boost investment and slow down the decline in North Sea production.
Oil & Gas UK, the industry association, said that rapidly rising costs and increasingly challenging fields was threatened the viability of projects in the North Sea and adding to the steep decline that could kill off the industry by 2020.
According to the Financial Times, the association is warning that investment in the British sector of the North Sea will be lower this year than in 2006, even though the price of oil has more than doubled from about Dlrs 60 per barrel (dpb) to almost 146 dpb.
But it also quoted its chief executive, Malcolm Webb, the association’s chief executive, raising the prospect that there could be more generous tax breaks on offer from the government in the autumn after he met Prime Minister Gordon Brown in May.
The North Sea is one of the fastest-declining oil provinces in the world, with output since 2002 falling at an average rate of 7.5 per cent a year, but Brown has been seeking maximum production.
Oil & Gas UK has estimated that if no new fields are developed, the North Sea will be, in effect, finished by the end of the next decade, after a further 7 billion barrels of oil equivalent (boe) have been extracted.
But with sustained investment, and some further discoveries, it hopes that the rate of decline could be slowed to 4-6 per cent a year, and a further 15bn-18bn boe extracted, keeping the North Sea alive until about 2040.
In contrast, the British government has suggested there could be another 40bn boe left, prolonging the life of the industry even further.
But as the resources of the North Sea are depleted, its fields have become less attractive, requiring heavy investment due to 90 per cent of all prospects being relatively small with less than 50m boe and more difficult to develop.