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Page added on February 4, 2010

UK’s Darling offers oil companies £1bn Shetland tax perk

UK chancellor Alistair Darling has offered offshore oil compaines tax perks worth nearly £1bn to encourage them to explore and develop oil and gas finds west of the Shetland Islands.

He announced the extension of the New Field Allowance to £160m per field, a concession so tightly drawn so it can only apply to those in deep waters on the Atlantic fringe, before his spring budget to prevent another summer season being lost before work can begin on the extensive infrastructure required.

Oil giant Total, leader of groups with two potential fields, stand to qualify for £320m in relief and there are at least four more fields likely to qualify in the area between Shetland and the Faroes in some of he most inhospitable waters in the world which is thought to contain a fifth of the UK’s remaining oil and gas reserves.

The companies continue to face ring fenced corporation tax at 30% but will not have to pay the additional 20 point surcharge until their allowance is exhausted.