Peak oil tax? UK oil & gas tax take at all time low

25 March 2010 25 March 2010

BonTrade

Peak oil tax? The UK government’s tax take from oil and gas production in the North Sea fell to its lowest ever level, under the current fiscal regime, in the year ended March 31, 2010, according to government data published on Wednesday 24th March 2010.

The UK treasury expects to take £6.4 billion (GBP) in corporation tax and petroleum revenue tax from companies producing oil and gas in the UK over the year. This is less than half the tax take in the previous year, during which oil prices hit their record high.

It is the lowest level since then Chancellor of the Exchequer Gordon Brown doubled the supplemental tax on oil companies in late 2005.

The fall in revenue is due to both a lower average oil price in 2009 and the rapid decline in output from aging UK oil fields. Total oil and gas output in 2009 fell 5.2% on the year. The average price of North Sea benchmark Brent crude oil futures was 37% down on the year.

The UK government expects North Sea revenues to rise in the 2010 and 2011 tax years to £8.5 billion (GBP), but the outlook for UK oil industry is weak.