The Government recognise the importance of the UK oil and gas industry to our economy and the dependable foundation it provides for the UK’s energy security.
While we are trying to reduce our dependence on fossil fuels we must and do recognise that this will be a long transition and our oil and gas reserves will continue to play a vital role in supplying our energy needs for many years to come.
We must ensure that the UK taxpayer receives a fair return from the extraction of our national resources. We are, however, committed to maximising the economic production of the UK’s reserves, for the fuel this delivers, for the contribution this makes to our economy, and for the jobs and skills the industry supports and develops.
For these reasons, today I am announcing secondary legislation that is to be laid before the House of Commons in due course and, subject to approval by the House, will support the development of remote gas fields in the west of Shetland region. The area to the west of the Shetland islands is the last major area in the UK continental shelf to be developed and infrastructure is critical to fully unlocking the gas potential of the region. It is estimated that the area contains around 20 per cent. of the UK’s remaining oil and gas reserves.
The legislation, if approved by the House, will extend the field allowance, announced in Budget 2009, to remote deep water gas fields, which are found in the west of Shetland area. The field allowance works by exempting an amount of income from the supplementary charge. All profits generated by qualifying fields are still subject to ring-fence corporation tax.
The legislation is to be introduced by Order and it is our intention that it will be effective from the day after the day on which it is made. Full details of this measure, including the proposed legislation, will be issued on HMRC’s website in due course when the legislation is laid before the House of Commons.