Further Taxation Developments

Well before the 1983 Budget tax proposals had been fully implemented ¹ the Interdepartmental Working Party on the North Sea Fiscal Régime had commenced work on a range of issues. The first was on the taxable capacity of future Southern North Sea gas fields. UKOOA had argued that the reliefs given to Central and Northern waters should be extended to the Southern Basin as well. It was agreed that the operators would provide cost and production data on fields likely to be considered for development and the Working Party would assess their profitability/taxable capacity. The profitability of fields outside the Southern Basin would also be examined, but it was not expected that tax changes would be recommended. The second subject to be examined was incremental projects. UKOOA had requested that the dialogue on this topic be continued. At late summer 1983 officials were unconvinced about the need for tax concessions and felt that the industry had to develop and substantiate its case. Other more technical issues also required consideration such as how the tax system affected the relative incentives for depleting gas condensate fields, and the development of gas fields for “peak shaving” purposes.