Jason Lovell, an oil and gas expert at Eversheds, has said that the UK government needs to ‘equip the Department of Energy & Climate Change [DECC] with the tools it needs’ in order to generate long-term tax revenue.
Lovell was commenting following news that the UK government will fast-track the implementation of Sir Ian Wood’s recommendations for maximising the UK’s remaining offshore oil and gas resources.
He said that the the incentive for driving investment to exploit the remaining resource in the North Sea is being firmly promoted by the UK government, ‘quite unashamedly for fiscal reasons’.
Lovell continued: ‘Recent years have seen an increasing acceptance on the part of the UK government that in order to generate long-term tax revenue it must also be prepared to invest.
‘It remains to be seen whether this acceptance will extend to equipping DECC with the tools it needs to operate effectively — as starkly described in the Wood Report.
‘DECC has a difficult path to forge: on the one hand it is required to push licence holders to develop their acreage but on the other, if it adopts too firm an approach, it
may dissuade oil companies who may choose to invest their E&P dollars in a more exotic basin.’
He added that it was a shame that the importance of this message may be somewhat lost in the discussion on Scottish independence.