U.K. offshore oil tax fixed

Press, Volume CXV, Issue 33779, 27 February 1975, Page 17

U.K. offshore oil tax fixed

(N.Z.P A.-Reuter— Copyright) LONDON, February 26. The British Labour Government has announced a 45 per cent revenue tax on offshore oil in a finely-balanced set of proposals which has brought cautious approval from the oil companies concerned.

Important reliefs for smaller fields are set out alongside the rules for the proposed petroleum revenue tax (P.R.T.). For some months, foreign oil companies, which account for about 60 per cent of the operations in the North Sea, had said that a P.R.T. might drive them away from smaller fields and reduce the oil production that Britain badly needs to pay off her international debts; but the 45 per cent rate is lower than many experts had feared. Most companies have declined comment, pendffig a closer study of the proposals, but Conoco, a subsidiary of Continental Oil, has described the proposals as “a sensible package.” Its statement went on: “The Government’s scheme goes a long way to removing P.R.T. as a limiting factor in North Sea explora-

tion. In short, we are more encouraged than we have been for some time.”

The Government’s plan was outlined in the House of Commons by the PaymasterGeneral (Mr Edmund Dell), who announced a series of concessions to cushion companies against the inflationswollen investment costs, and to protect the so-called marginal fields that some companies say may not be worth developing. In the first place, Mr Dell said, companies could claim 175 per cent of their capital expenditure costs falling liable to P.R.T. The first million tons of oil produced by any field would also be free

of P.R.T., and on top of that running operating costs could be claimed. In addition, any company would be exempt from P.R.T. if it could show that the tax reduced its return on capital to less than 30 per cent.