British oil & gas investment to rise to record levels

By Benjamin Chiou

Date: Friday 13 Jan 2012

The UK upstream sector is expected to see a massive rise in capital investment this year, leading to a large increase in the level of British oil and gas tax revenues.

According to Reuters, the UK Treasury sees total tax revenue from the oil and gas industry breaking through the £13bn barrier this fiscal year (2011-12). However, a stabilisation in falling production levels is not included in this forecast.

The news agency says that a halt in falling output alone would see the Treasury realise an extra £2bn in 2012, compared to 2010.

According to a review by research firm Wood Mackenzie, “2011 was a mixed year for the UK upstream industry. An increase in Supplementary Charge reduced UK company values by an average of 21% and highlighted the instability of the UK fiscal regime.”

“However, continued high oil prices gave companies the confidence to progress projects, leading to record levels of capital investment,” the consultancy said.

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