Running some distance ahead of Alaska, the United Kingdom (UK) recently has been shaping a new oil and gas policy in response to declining North Sea production.
The UK hit a low point of its relationship with the industry with the announcement in 2011 of a new tax system that increased taxes on revenues from new investments (to 62%), on old oil production (to 81%), and significantly reduced the deduction for decommissioning costs — an important factor in the UK North Sea.
Industry response was swift and significant. Efforts to extend old fields and investments in new fields were cancelled and investor confidence in the UK system plunged. Continue reading