MD Shell Expro warns UK government on tax issue

Apr 16, 1998 02:00 AM

The UK North Sea activity might be "fatally wounded" if the government fouls up its review of the upstream tax regime, oil company chief Rothermund said recently.
Mr Rothermund, managing director of Shell Expro and last year's UKOOA president, said that if the government got the tax changes wrong, it would be "very difficult, if not impossible" for the industry to regain its momentum.
Activity suffered the last time a British government made a mistake with North Sea taxation in the mid-1980s, but the reserve base was then much stronger, Mr Rothermund said.
The government has indicated that it is not happy with the current fiscal regime and has put forward proposals for either the re-introduction of petroleum revenue tax or a supplementary corporation tax.
Industry is firmly resisting the notion, stating that there is no spare taxable capacity in the UK upstream sector. Mr Rothermund suggested he would not be surprised if the low oil price and uncertainty over tax encouraged smaller players to exit the sector.
Offshore operators are already facing the additional work burden of European environmental impact regulations, which are set to come into force this month.
Mr Rothermund admitted he was worried about the additional time this might add to project schedules, although this will vary from company to company.
He pointed out that Shell Expro has voluntarily carried out environmental assessments for offshore developments and activities for many years.
The new regulations require oil companies to perform environmental impact assessments (EIAs) for all offshore developments, exploration and appraisal drilling and for the installation of pipelines over a certain size, unless granted an exemption by the government.

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