UK taxes from oil will decline and cost of oil production per barrel to rise

Posted on February 28, 2014

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UK offshore

The UK oil and gas industry had a production rate that was 8 percent less last year despite investing a record-breaking 8.9 billion pounds, Reuters reported. A report by industry lobby Oil and Gas UK revealed UK taxes from fossil fuels are expected to decrease to 5 billion pounds from 6.5 billion pounds in the 2013-2014 financial year. In contrast, for every barrel of oil equivalent, oil and gas operators spent an average of 17 pounds last year and this figure is projected to grow to more than 18 pounds per boe in 2014. “This relentless rise in costs is unsustainable and will result in yet more fields being shut-in and prematurely decommissioned if it is not addressed,” the Oil and Gas UK report said. To boost production, the British government announced a new industry regulator, which may punish companies that do not maximize production at oil and gas fields.

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