Friday 18 January 2013

Tax and oil prices boost UK North Sea drilling

Drilling in the UK’s part of the North Sea was boosted by new tax allowances and high oil prices last year.

UK Continental Shelf drilling went up by a third, according to Deloitte’s petroleum services group (PSG) which says this shows “renewed vigour” in the region.

There were 65 new wells drilled over 2012, a rise of 33% on 2011 says the analysts’ new report which compares this to lower activity reported in Norway in 2012, which fell by a fifth.

The UK was also host to a large chunk of oil and gas field sales, with 80 out of 129 deals announced in the North West Europe taking place here. This European surge in deals is one reason why analysts predict positive prospects for the sector in 2013.

They believe the fact that companies are buying more fields outright shows “rising investor confidence”.

Graham Sadler, managing director of Deloitte’s PSG said: “After several years of caution and uncertainty, we have a more positive environment, where a number of factors such as tax incentives, high oil price and appetite to invest have combined to make 2012 the most encouraging year for a long time.”

The Treasury announced a brownfield allowance in September 2012 to encourage firms to extend the lifespan of existing fields. Also earlier in the year Chancellor George Osborne increased another small field allowance and set up two new supports: one for large deep-water developments targeting the West of Shetland and another for shallow water gas field projects.