Oil and gas firms could scrap £50bn of North Sea projects

Marion Dakers
THE SURPRISE tax raid on oil and gas firms could prompt companies to cut capital expenditure by £50bn over the life of the North Sea reserves, a report is set to claim this week.

Oil & Gas UK has overhauled its annual forecasts following the shock tax rise announced in the Budget in March, and is due to report its findings later this week.

The industry group has already backed research by Aberdeen University, which found that £50bn in capital expenditure and £30bn of investments would be shelved in response to the overnight rise in supplementary tax from 20 to 32 per cent.

At the start of 2011, investment in the UK-controlled parts of the North Sea was rising sharply after five years of decline, the firm said in a report before the tax hike.

Up to 24bn known barrels of oil equivalent are still up for grabs in the remaining North Sea reserves, which are expected to last until the 2040s.

The lobby group had forecast in excess of £11bn going to the government coffers this year as a result of direct North Sea taxation but is expected to reveal a lower estimate once its report is signed off this week.