UK Loses Money on North Sea Oil for First Time Since Records Began
The British government has incurred a loss from North Sea oil and gas production for the first time since records began almost half a century ago.
While as recently as 2011 the industry contributed almost £11bn to the country’s coffers, last year’s dramatic global decline in oil prices caused the balance sheet to fall into the red for the first time since records started being kept in 1968-69.
The UK Treasury received £538m in corporation tax from North Sea oil and gas production in 2015-16, but incurred a £562m loss in petroleum revenue tax, leaving a negative balance of -£24m, the figures published by HM Revenue and Customs show.
In a statement, HMRC said “significant” investment in existing and new oil and gas projects, “increasing amounts” of decommissioning expenditure and a decline in the volumes of oil and gas produced had contributed to the overall loss.
Describing the figures as “particularly concerning”, Scotland Secretary David Mundell said the UK Government was doing “everything it can” to support the North Sea industry become competitive again, including the passing of new tax measures worth £2.3bn designed to increase investment.
“It is because of the broad shoulders of the wider UK economy that we are able to provide this support to our oil and gas industry, and to the thousands of workers and families it supports, at this very difficult time,” he added.
Workforce cuts
Next week Mr Mundell is due to travel to Dallas and Houston, the two largest oil and gas producing cities in the United States, to press the case for investing in the North Sea and to help Scottish firms export their expertise in the industry.
The HMRC figures were published a day after the energy giant Shell said it intended to cut its UK workforce by a fifth due to what it described as “challenging” market conditions.
The plans will result in 475 job losses at the company’s headquarters in Aberdeen.
“Hot on the heels of the announcement of further job cuts, these figures underline the scale of the challenge that the energy sector in the North East is facing,” Scottish Liberal Democrat North East MSP Mike Rumbles said yesterday.
“We need Scottish and UK government ministers to work together to ensure that the industry is given every chance to succeed.
“Unions have warned that the current rate of job losses has the potential to fatally undermine the long term future of the sector in Scotland.
“We cannot afford to just stand by and watch the industry in difficulty and it is time that action from Ministers matched the scale of the problems we are experiencing.”
