North Sea oil balance sheet in the red for first time

Blow to wider economy
Blow to wider economy

The UK Government has incurred a loss from oil and gas production for the first time in history.

The Treasury put £24 million more into investment and decommissioning than it got back in petroleum revenue tax in 2015/16, the first time the oil balance sheet has been in the red since records began in 1968/69.

The Government said “it is doing everything it can to support the North Sea industry” following the “concerning” figures, compiled by HM Revenue and Customs.

The Treasury received £538m in corporation tax from production, comprising £259m in ring-fenced corporation tax and £279m from the supplementary charge - which was halved by the Chancellor in March and backdated to January 1.

This was not enough to compensate for the £562m loss it incurred in petroleum revenue tax (PRT), leaving a negative balance of £24m.

Scottish Secretary David Mundell said: “These oil and gas revenue figures are particularly concerning, showing a fall to their lowest level since the 1960s.

“That’s why the UK Government is doing everything it can to support the industry to become innovative and competitive on a global scale.

“No other government has supported their industry so extensively. We have established the Oil and Gas Authority to drive greater collaboration and productivity within the industry, and in the last two Budgets we announced major packages of tax measures worth £2.3 billion to ensure the UK Continental Shelf remains an attractive destination for investment.

“We are working collaboratively with the Scottish Government and Aberdeen City and Aberdeenshire councils to support the area, but 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.”