North Sea Reporter News & Analysis – keeping you informed 28 January 2015 Issue 308 www.klenergypublishing.com INSIDE THIS ISSUE Spitsbergen returns 2 Ocean Rig backlog boost 3 European activity report 13 CONTENTS Rig market 2 Construction 9 Contracts 10 Production 13 Politics 14 Africa/Med briefing 15 Drilling 15 Oil price 21 Companies 21 Safety 23 Renewables 23 People 24 Conferences 24 How to subscribe..... For details on North Sea Reporter and how to subscribe, please refer to our website www.klenergypublishing.com. Alternatively, contact us via the details on the back page. Also, please refer to the website for NSR quarterly indexes. Treasury initiates consultation on basin-wide investment allowance The UK Treasury has initiated a consultation on the planned basin-wide investment allowance aimed at stimulating new field development by cutting the tax take to 45-50%. The move has been welcomed by the industry as a positive signal to investors, but urges its delivery to be fasttracked and to take effect from the March Budget if the UKCS is to regain any attraction for investment in the current climate. Speaking at a meeting in London last Thursday (22 January) with Prime Minister David Cameron and industry representatives, hosted jointly with Danny Alexander, Chief Secretary to the Treasury, and Treasury minister Priti Patel, Alexander said: “These are difficult times the oil and gas industry, which is why I am announcing that we are fast-tracking consultation on an investment allowance, a move the industry has told us will incentivise investment opportunities in new and existing fields across the North Sea. We will take action on oil and gas to help the industry in the Budget.” Speaking in Edinburgh, also on Thursday, Oil & Gas UK CEO Malcolm Webb said: “We are encouraged to note that work on the investment allowance announced in the Autumn Statement is progressing. However, a reduction in the headline rate of tax is also essential to really improve the international competitiveness of the UKCS. Given the maturity of the basin, I am afraid there will be no second chances.” O&GUK welcomes the comprehensive scope of the new allowance, which must also be easily accessible for all investors and help promote investment in all types of activity seeking to maximise economic recovery and extend the productive life of the basin. It also welcomes the effort that has been made to consider appropriate transition measures that preserve the value of existing allowances under the new regime. It will be seeking further clarification on a number of points, including the rate of the allowance, which it says must be competitive. Webb concluded: “We now need a much lower, simpler and more stable tax regime that will allow investors to shift their focus away from fiscal risk towards investment opportunities. We see today’s announcement as a first step.”