UK Aims to Get Best Out of Brown Fields with Tax Relief

The UK government is aiming to encourage investment into older ("brown") oil and gas fields on the UK Continental Shelf (UKCS) with the introduction of a tax relief on those fields.

The Chancellor for the Exchequer, George Osborne, who made the announcement on Friday, said that the tax breaks would apply to certain qualifying older fields and would mean tax breaks on up to £250 million on those fields. The tax shield could amount to up to £500 million for those companies who already paying the Petroleum Revenue Tax, from the 32 per cent supplementary charge rate.

A statement for the British Treasury said it is hoped that these tax reliefs will help to encourage greater investment into older oil and gas fields on the Shelf, thus increasing tax revenues from those projects. 

"Today’s tax allowance is more good news for the North Sea, good news for jobs and good news for the broader economy," the Chancellor said in Friday's statement. "It will give companies the incentive to get the most out of older fields, creating jobs and delivering more revenue for taxpayers."

This is the latest in a number of schemes by the British government to increase production and revenue on the UKCS, which has seen a steady drop in production and exploration in the years since 2008. 

In July this year, the UK government announced a tax break for shallow water gas fields on the Shelf, a relief which enabled Centrica to begin operations on the massive shallow water Cygnus field.