ABSTRACT
This chapter aims to understand the government's rationale for reform and ascertain the specifics of the Treasury's objective for that reform and its associated guiding principles. On 4 December 2014, the Treasury published its review of the oil and gas fiscal regime. It was commissioned by the then Chancellor George Osborne that previous March in response to the publication of the final report by Sir Ian Wood. The Wood Report was one of the most influential documents in recent times to shape oil and gas governance in the UK. The government legislated the maximum economic recovery UK as a 'principal objective' to be achieved through 'development, construction, deployment and use of equipment used in the petroleum industry', and through 'collaboration' between licence holders, operators, asset owners and contractors. The hotelling model is considered within perfect competition where owners of the oil fields are price-takers, and as such their extraction rates cannot influence the price of oil in of themselves.
