High Pressure/High Temperature Gas, take three – the way forward
19 March 2014
Derek Leith, head of oil and gas taxation and office managing partner at EY in Aberdeen, comments on the announcement of a new High Pressure/High Temperature allowance in today’s (Wednesday 19 March) Budget
“The announcement of a new HP/HT allowance is the third attempt by industry and HM Treasury to introduce an incentive to support the development of large HP/HT fields.
“The new allowance is different from its predecessors in that it is set as a percentage of capital spend including exploration and appraisal as well as development costs. As such, it is tailored more to the actual economics of the field.
“This is a significant development in the various fiscal incentives introduced to stimulate North Sea investment following increases in Supplementary Charge in 2006 and 2011. For the first time in an offshore context we have an allowance which is given directly in proportion to capital spend. This can be seen as the way forward for such allowances.
“It should enable the development of at least two large gas fields with related benefits to the supply chain and the UK economy as a whole.”
For more information on the 2014 Budget, visit the EY 2014 Budget page.