3 The fiscal regime
51. Profits arising from the extraction of oil and
gas in the UKCS potentially fall within two fiscal regimes: petroleum
revenue tax (PRT) and ring-fenced corporation tax (RFCT), which
also incorporates supplementary charge (SC or SCT). PRT is
a field-based tax and can produce an assessable profit or an allowable
loss; the latter may be taken forward and set against later profits
from the same field. It does not apply to fields given development
consent on or after 16 March 1993. Corporation tax on upstream
oil and gas is levied at 30%. A supplementary charge of
ten per cent on adjusted ring fence profits was introduced in
2002 and increased to 20% in 2006. Adjusted ring fence profits
are the amount of profit or loss arising from any ring fenced
activities, excluding any financing costs. Fields not paying PRT
will thus be liable to a marginal tax rate of fifty per cent.
52. This fiscal regime has led to very significant
tax receipts for the public purse. Oil & Gas UK's 2008 Economic
Report estimated that, over
the previous four decades, the industry had provided £248
billion in tax revenues to the UK Exchequer and that 2008's high
prices would result in tax receipts of around £15 billion
for the fiscal year (assuming an average price of $110 for 2008),
with a further £5-6 billion in tax receipts added from UK
supply chain activity, primarily from Corporation Tax and payroll
contributions.[60]
However, the regime
is unpopular with those subject to it. Oil & Gas UK told us
that "the current fiscal regime is no
longer fit for purpose. It appears to be designed to maximise
short-term revenues for the Treasury at the risk of long-term
recovery of reserves and security of energy supply."[61]
53. Oil & Gas UK has argued - unsurprisingly
perhaps - that the overall tax burden on the mature UKCS must
be reduced and that "difficulties in attracting and maintaining
investment in the UKCS for projects of all kinds have been suddenly
and materially increased." It goes on to argue:
When the oil price was last in the $40-$45 per
barrel range, new developments were subject to a tax rate of 40%,
but are today liable to 50%. Certain mature fields are subject
to a marginal tax rate of 75%. The mismatch of tax rate and current
business environment is detracting from the value of investment
and is contributing to the dampening of that investment. Government
help is urgently needed for both established companies and the
new smaller businesses that have been explicitly encouraged into
the basin by Government policy. Material improvements in the current
tax regime are now required to stimulate additional capital investment
both through the current downturn and in the longer term.[62]
54. BP told the Committee that while in recent years
the UKCS fiscal regime had not been "draconian or uncompetitive
in global terms", the difficulty was "that it has not
adapted sufficiently to the needs of a mature basin. One of the
characteristics of a mature basin is that geographically and commercially,
every aspect of the operation becomes much more difficult. Many
of these aspects are beyond human influence; but this means that
those which are capable of adjustment (i.e. regulatory and fiscal)
become even more significant."[63]
Therefore, BP argues that one key factor for maximising the potential
of remaining reserves is:
A competitive and less complex fiscal regime
which recognises the growing challenges facing the North Sea industry
and the need to reduce the tax burden on a sustainable basis as
the basin continues to mature.[64]
55. The complexity of the fiscal regime was also
highlighted by the Independents' Association, which also argued
for the regime to be predictable in order to inspire confidence
in potential operators:
The UK fiscal regime is extremely complex and
a result of 40 years of constant tinkering. It was developed when
fields containing hundreds if not billions of barrels were being
found. It is now recognised as a fiscal environment with significant
risk of (adverse) change. For investors to invest they will always
make assumptions about the stability of the tax system prior to
investing. The UK does not fare well in this regard, particularly
as it requires very significant upfront investments over a number
of years prior to cash flow. One actual example would be an exploration
investment made on the basis of a 30% tax regime in 2001, which
then changed to a 40% regime whilst the discovery was being evaluated
for development, and finally became 50% when the bulk of the development
capital (totalling $3bn) had already been committed. Is this an
environment that encourages sustainable and long term investment?
The industry understands that the UK needs a fair return on the
development of its resources, however we need to consider a tax
regime that is above all predictable, [and which] encourages
new investment in maximising the development of remaining hydrocarbons
from the basin…[65]
The concept of a Value Allowance
and the introduction of the Field Allowance
56. The Government has recognised that the fiscal
regime needed to adapt and, following a consultation launched
at the 2008 pre-budget report, introduced measures in the 2009
Budget designed to support investment in the UKCS. DECC told us
that
Central to this package is the introduction of
a new "Field Allowance" (described in the consultation
document as a "value allowance"). This will give incentives
to encourage investment in small or technically challenging fields,
which could assist in unlocking around 2 billion barrels of the
UK's remaining oil and gas reserves. It will be targeted at new
small fields, with an allowance set at £75 million, and at
challenging new High Pressure High Temperature or Heavy Oil fields,
with the allowance set at £800 million. The introduction
of the Field Allowance marks a significant change to the approach
of the North Sea Fiscal Regime. The Government believes it has
the potential to make an important contribution to the competitiveness
and attractiveness of investments in the UKCS.[66]
In the Budget statement the Chancellor told the House
that he was "bringing forward incentives to encourage smaller
fields to be brought into production, which could lead to an extra
2 billion barrels of oil and gas that would otherwise remain under
the North sea."[67]
57. The Government's Budget Note 10 further explains
the operation of the Field Allowance:
A new 'Field Allowance' is to be introduced which
will provide certain categories of new field with a fixed allowance
which can, over time be offset against the supplementary charge
payable by the companies involved in the field. Once that allowance
is exhausted the field will, in effect, pay the full North Sea
rate of tax. The speed of exhaustion will depend on the profitability
of the company - i.e. if oil prices rise then, all other things
remaining equal, the allowance will be exhausted more quickly.
The field allowance applies to small fields, ultra heavy oil fields
and ultra high temperature/high pressure fields:
? the field
allowance for small fields is £75 million for fields with
oil reserves (or gas equivalent) of 2.75 million tonnes or less,
reducing on a straight line basis to nil for fields over 3.5 million
tonnes. In any one year the maximum field allowance (for a field
with total allowance of £75 million) is £15 million;
? the field
allowance for ultra heavy oil fields is £800 million for
fields with an American Petroleum Institute gravity below 18 degrees
and a viscosity of more than 50 centipoise at reservoir temperature
and pressure. In any one year the maximum field allowance is
£160 million; and
? the field
allowance for ultra high temperature/pressure fields is £800
million for fields with a temperature of more than 176.67 degrees
Celsius and pressure of more than 1034 bar in the reservoir formation.
In any one year the maximum field allowance is £160 million.
[68]
58. Before the detailed measures were announced in
Budget 2009, the concept of a field allowance (known as a value
allowance in its earlier iteration in the 2008 consultation document)
was given a qualified welcome by some witnesses to our inquiry.
The BG Group told us that the allowance "could lead to security
of supply benefits with oil and gas volumes that would not otherwise
have been produced becoming commercially viable… [and] that
high pressure, high temperature (HPHT) fields that are expensive
to drill and technically challenging and small field discoveries
close to existing infrastructure could benefit in particular from
a Value Allowance".[69]
Oil & Gas UK's evidence said that it was "a welcome step
in the right direction" but argued that "additional
and bolder" steps were required.[70]
59. However, other witnesses were less convinced
of the benefits of such an allowance. BP told us the "Value
Allowance by itself cannot make the material difference required
in the current economic and oil price environment. It will also
further complicate the already excessively complex fiscal regime,
counter to BP and industry advocacy of simplification and the
desired move towards a level playing field for investment decisions."[71]
Shell said that, while it saw "some merit" in the value
allowance proposals, it thought that "Government is missing
major opportunities in not targeting both new developments AND
incremental investment in existing fields. Bringing on incremental
production is a huge challenge in the current environment and
we believe that Capital Uplift[72]
is a more effective measure to bring incremental projects on-line.
We believe the VA proposal benefits only a small portion of the
UKCS portfolio, in addition to being complicated and prohibitively
expensive for Government to make a real difference. Moreover,
it does not address brownfield expenditure, where the largest
opportunity sits".[73]
60. Other witnesses agreed that it was important
to support further incremental production in fields already in
production, and that the value allowance as proposed by the Government
would not achieve this. Centrica told us:
There is more to be gained from maximising recovery
from existing fields than there is from developing new marginal
sources of oil and gas. HM Treasury's proposals for a value allowance
appear to incentivise the development of new marginal fields over
the exploitation of existing opportunities, ignoring the advantages
of existing infrastructure. Centrica supports a broader capital
uplift allowance, which would incentivise both new and existing
fields on a comparable basis.[74]
Oil & Gas UK - while, as we noted above, calling
the value allowance a step in the right direction - said that
"to have any effect, it must be material in scale for both
new and incremental investment."[75]
BP also emphasised the important of encouraging incremental investment:
"incentives must be made available to encourage incremental
investment options in existing fields through the provision of
capital uplift".[76]
61. In its 2008 consultation document, the Government
made it clear it did not support this proposal, for the following
reasons:
—an across the board uplift would represent
a blunt instrument as it would apply to all capital expenditure,
including already sanctioned expenditure. It would not therefore
effectively target support on those fields facing the greatest
challenges within the UKCS.
—it would involve significant deadweight
cost. Whilst it was argued in the course of the discussions that
this deadweight cost could be offset by the resulting increased
production, more detailed analysis has suggested that this is
unlikely to be the case. This proposal would therefore also undermine
the principle of maintaining a fair return to the UK taxpayer.
—implementation of such an incentive would
be neither simple to design or operate. Giving relief for 125
per cent of capital costs would require either a fundamental rewriting
of large parts of the capital allowance rules (to take account
of relieving more than 100 per cent of cost) or the introduction
of a whole new relieving mechanism for the additional 25 per cent
uplift. Either would require large amounts of additional legislation,
and additional ongoing compliance obligations for both HMRC and
companies. [77]
62. Another option put to us as a favourable alternative
to a value allowance was a reduction in the supplementary charge
(SC or SCT). Total E&P told us:
There is a strong argument for the reduction
of SCT rather than a complex Value Allowance determination which
is proposed by HM Treasury. A simple reduction in SCT would be
unambiguous, simple and give a direct signal to industry that
Government is committed to helping sustain the UKCS. This is for
us the major point. Taking into account the lack of visibility
of future prices, decisions to proceed with new projects are difficult
to take and such a signal from government would have a real impact.[78]
BP agreed, telling us "a more appropriate fiscal
reform would be a straight forward and significant reduction of
the rate of SCT, which would achieve more effectively and simply
the objectives held out in the Value Allowance proposal."[79]
63. The Government considered the case for a reduction
in the supplementary charge in its 2008 consultation document,
but did not favour this option:
The Government does not believe that an across
the board reduction in the rate of SC would be desirable. This
would act to give the greatest incentive to those projects with
the greatest profitability, which by definition are those that
least require support, and therefore would result in significant
deadweight costs. Moreover, whilst the Government recognises that
some new fields may require additional support…the Government
believes that overall the fiscal regime is appropriately balanced
and set at the correct level to ensure a fair return to both producers
and consumers.[80]
64. Having set out its stall against a capital uplift
and a reduction in the rate of supplementary charge, the Government
announced in Budget 2009 that a field allowance was to be introduced.
Following this announcement we received further evidence from
some in the oil and gas industry setting out their reactions.
BP said that "the provisions in the Budget will fail to have
any significant effect upon BP's planned activity levels in the
UKCS. We do not oppose the Value Allowance, now defined as Field
Allowance, as formulated in the Budget; but it does not go nearly
far enough to assist our own activities or indeed, we would argue,
the wider interest of the Industry and the nation".[81]
They criticised the field allowance because, they argued:
- It does not provide any assistance
for fields currently in production or for the area west of Shetland.
Thus, they state that "the sharp fall in UKCS platform drilling
activity already witnessed during the first quarter of 2009 will
soon translate into accelerated production declines in those fields
where infill drilling has been reduced or ceased".[82]
- There are excessively high qualifying criteria
for the allowance, especially regarding high pressure/high temperature
(HPHT).
65. The latter point, regarding HPHT, led BP to a
highly critical conclusion concerning the field allowance provisions:
we expect that this measure will have a negligible
impact on UKCS investment. Indeed, it seems that only one HPHT
undeveloped discovery in the North Sea satisfies the stipulated
temperature and pressure criteria, both of which must be met in
order to qualify. It certainly won't affect BP's behaviour as
none of our five HPHT discoveries meets this onerous criteria.
The reality appears at odds with the Chancellor's statement that
the Field Allowance would encourage the development of up to a
further 2 billion barrels of oil equivalent. If the Government
had accepted Industry's proposals in respect of the HPHT qualifying
criteria, this measure could have made a significant medium term
difference to industry investment. As it stands, this appears
impossible.[83]
66. Oil & Gas UK welcomed the allowance as a
recognition by government "that it needs to reduce the tax
burden to stimulate investment in the mature UKCS".[84]
They also said that the allowance was a "modest step forward
and will offer some limited incentives for the development of
marginal fields". However, their evidence stated that:
our members tell us that it will do very little
to improve the UK's competitiveness or attractiveness for investment
when competing for capital on a global scale. Given the limited
scope and extent of the allowance, it is only likely to accelerate
the development of one or two marginal small fields over the next
couple of years. We certainly do not see it reversing the decline
in capital investment.[85]
In addition to the specific points below concerning
HPHT and incentives for new fields, the organisation was concerned
that the allowance:
- Does not apply to existing
fields and so will "do nothing to address the collapse in
investment in brownfields, nor will it reactivate drilling campaigns
which have currently halted";
- Will have a negligible effect on exploration
activity; and
- Will not encourage production west of Shetland
or tight gas development.[86]
The Oil and Gas Independents' Association have also
told us that the Government should look at extending the allowance
to assets west of Shetland and non-conventional gas.[87]
67. Oil & Gas UK agreed with BP that the qualifying
threshold for HPHT - at 15,000psi and 350F - is too high and noted
that the original thresholds proposed were pressures of 10,000psi
and 300F. They were also concerned that the threshold for ultra
heavy oil fields is prohibitive. They state that "in both
heavy oil and even more so for HPHT, these are tighter technical
limits than were proposed by Oil & Gas UK and many of our
members have expressed strong reservations about the allowance's
efficacy in light of their opinion that it is only likely to have
very limited impact."[88]
The Oil and Gas Independents' Association have also called for
the HPHT criteria to be less stringent.[89]
68. Oil &
Gas UK are also concerned that the allowance will have limited
success in encouraging new fields. They estimate that the allowance
will typically increase the economic value of new small field
developments by around £8 million on a discounted post-tax
basis, which they say should be compared to the scale of investment
- typically between £100 - 200 million which the allowance
is trying to encourage. They note Professor Kemp's estimate that
the allowance for small fields could add around 400 million boe
over the life of the UKCS.[90]
To put that figure in context, it equates to approximately 2%
of the 20 billion boe which is DECC's best estimate of
remaining recoverable hydrocarbon resources from the UKCS. It
is a fifth of the additional production which the Chancellor said
his budget proposals could stimulate.
69. The general consensus amongst our witnesses -
that the field allowance's beneficial effects will be limited
- was shared by Shell UK. While, like others, they were pleased
that the Government had recognised the difficulties faced by the
industry, they were concerned that "the proposed scope, criteria
and levels for the incentives set out in the 2009 Budget are not
enough to reverse the projected decline in capital investment
in the UK continental shelf (UKCS) and will not have adequate
impact on the UK's competitiveness and attractiveness to win global
investment. We believe the measures will result in only a relatively
limited increase in activity in the UKCS."[91]
Analysing the potential impact of the allowance
on their entire UKCS portfolio, Shell found that:
- Only one development prospect
would potentially qualify for the Field Allowance for small fields,
but that the allowance is too small for it to be a deciding factor
in capital allocation
- Only one field might qualify for the ultra Heavy
Oil fields allowance, and again the impact on the project's economics
would not move the project out of the marginal category
- The ultra High Pressure High Temperature allowance
will have a significant effect on only one block.
For these reasons, the company concluded that the
allowance "will only potentially incentivise a very small
portion of our portfolio and we believe it is unlikely that these
measures will generate the additional two billion barrels of oil
predicted by the Chancellor".[92]
70. Shell UK, like other witnesses, felt that the
allowance's impact will be limited as it does not incentivise
investment in brownfield sites. They made the case that "in
the present economic climate bringing on incremental production
on producing fields is hugely challenging. Efforts to extend field
life and increase recovery of existing fields are more marginal
than in past years due to lower oil price, smaller targets and
high reservoir complexity" and therefore argued that it was
a "critical priority" for government to align an incentive
for brownfield developments alongside the Field Allowance as presently
proposed.[93]
71. We welcome the introduction of the field allowance
in so far as it acknowledges that the tax burden on companies
operating in the UKCS needs to be altered in order to stimulate
vital investment. However, we are very concerned that the allowance
seems to be flawed in a number of fundamental ways. The main problem
is that it does not incentivise incremental investment in existing
sites. Furthermore, we are concerned that: it is likely to be
ineffective in encouraging investment west of Shetland; the criteria
for qualifying for the allowance are so stringent (especially
with regard to HPHT) that its effect will be minimal; and its
modest scale is such that it will not provide a significant incentive
for investment even in new fields. We share the concerns of witnesses
that the allowance will not stimulate the production of the 2
billion extra barrels of oil hoped for by the Chancellor.
72. The Government should review the operation
of the allowance in its first year of operation and be prepared
to extend its scope and widen the qualifying criteria in light
of that review. In any event, we think there is a very strong
case for widening the allowance so as to provide a meaningful
incentive for investment west of Shetland and to encourage HPHT
opportunities. Furthermore, much of the UKCS remaining reserves
are in fields which are not new but which will not be further
exploited unless the fiscal regime makes incremental investments
more attractive. This is especially the case in PRT-paying fields
where the overall tax rate is 75%.
73. We note the Government's reasons for pressing
ahead with a value or field allowance, rather than options which
appear to have the benefit of being less complex and of incentivising
a wider range of production, such as an across-the board capital
uplift or a reduction in (or the removal of) the supplementary
charge. We recommend that in reviewing the operation of the field
allowance and assessing its effectiveness in increasing investment
the Government be prepared to reconsider the merits of these bolder
moves. It should calculate and set out the predicted effects on
production and tax revenues of a capital uplift or a reduction
in supplementary charge alongside the effects on investment in
the industry. We recognise that the nation should receive a return
in the form of both economic production and tax revenues from
the UKCS.
Other measures in the Budget
74. DECC told us that the budget provisions relating
to the North Sea fiscal regime "also include measures to
assist asset trades and give companies the certainty and stability
they need to underpin investment. In brief, in addition to the
new Field Allowance, the package of reforms announced at Budget
comprises:
- Changes to the chargeable gains
regime within the North Sea ring-fence to remove chargeable gains
entirely from licence swaps and making gains exempt where disposal
proceeds from ring fence assets are reinvested within the UKCS.
- Changes to the North Sea fiscal regime to remove
potential barriers to projects that re-use North Sea infrastructure
for non-ring-fenced purposes including gas storage, carbon capture
and storage and wind energy.
- Amending the petroleum revenue tax (PRT) regime
to ensure that companies whose production licences have expired
are still able to access PRT decommissioning relief where appropriate.
- Changes to the PRT regime to reduce the administrative
burden it imposes, simplify compliance and repeal obsolete legislation."[94]
75. Our witnesses generally welcomed such measures.
Oil & Gas UK said that the change to the chargeable gains
regime should "help encourage asset trading which has slowed
down significantly in recent years."[95]
Shell UK welcomed "the encouraging announcement with respect
to North Sea asset transfers. All of the measures contained within
the Budget to assist asset trades i.e. changes to the chargeable
gains regime, amending PRT etc … provide very helpful certainty
and stability. It was also encouraging that the Change of Use
issues identified in the November 2008 PBR were included in the
Budget papers with the additional good news that HMRC are now
willing to accept that the cost of Cushion Gas in Change of Use
projects will, as requested by Industry, be treated as plant for
the purposes of Plant and Machinery Capital Allowances. Finally
we were also encouraged that the PRT decommissioning concern from
Industry (post licence expiry decommissioning cost) was also addressed
in the Budget."[96]
BP too welcomed these technical measures as "necessary improvements
for which we are grateful. Unfortunately, however, they are not
material in terms of encouraging additional investment."[97]
76. The Government was right to listen to the
concerns of the industry regarding specific issues relating to
the chargeable gains regime, the re-use of North Sea infrastructure
for non-ring-fenced purposes and the operation of the Petroleum
Revenue Tax. The changes announced in the Budget regarding these
areas are modest but welcome.
77. A specific change to the fiscal regime sought
by the industry was for smaller companies to be able to benefit
from tax allowances at an earlier stage. Oil & Gas UK said
it would welcome "accelerating the payment of accrued, but
so far unrelieved, tax allowances to smaller companies. [This]…would
release much needed capital to small companies for investment
in the basin at minimal cost to the Government. The Government
has pursued a laudable policy to attract these smaller companies
into the basin. It should throw this inexpensive lifeline to
them now and not simply abandon them".[98]
Following the Budget, the organisation was disappointed that
"the government… failed to act on our proposals to provide
cash relief of unexpensed "Ring Fence Expenditure" which
would have helped small companies and given a much needed boost
to exploration".[99]
78. DECC's memorandum noted the operation of the
"Ring Fence Expenditure Supplement (RFES) [which]
assists companies that do not yet have any taxable income for
corporation tax or the supplementary charge against which to set
their exploration, appraisal and development costs and capital
allowances. The RFES increases the value of unused expenditure
carried forward from one period to the next by a compound 6 per
cent a year for a maximum of six years. It applies to all unrelieved
expenditure from 1 January 2006. This is intended to help support
new entrants into the basin".[100]
79. We note the case presented to us by industry
representatives for accelerating the payment of accrued but unrelieved
tax allowances to smaller companies and their argument that the
lack of equity and debt financing makes this particularly desirable.
We urge the Government to estimate the costs and potential benefits
of this proposal as a means of tackling the impact of the credit
crisis on investment in the UKCS.
80. The Budget's provisions regarding the field allowance
and the technical matters noted above are welcome as far as they
go. Industry representatives were positive about the dialogue
that has gone on with Government.[101]
However the evidence we received from most industry representatives
argued that the measures announced in the Budget do not go far
enough:
The government failed in the recent Budget statement
to take the necessary strategic action that will encourage the
maximum recovery of its indigenous oil and gas reserves and ensure
that these precious resources can play a full role in helping
to meet the UK's future energy needs. Time is running out and
corrective action now needs to be taken. (Oil & Gas UK)[102]
There is still a material risk that UKCS investment
will fall sharply over the next couple of years. While this is
not related exclusively to the Fiscal Regime, it is clear from
BP's perspective that the Budget's fiscal package will make no
difference to our own investment plans. We expect the same applies
to the industry as a whole. (BP)[103]
Overall Shell U.K. Limited welcomes the measures
in the April 2009 Budget as a step in the right direction. However
we believe it is not enough to reverse the projected decline in
capital investment in the UKCS, will have little impact on the
UK's competitiveness and attractiveness to attract global investment
and ultimately result in a relatively limited increase in activity
in the UKCS…. We are firmly of the belief that the proposed
measures are not enough. The need to incentivise additional development
has become even more pressing since discussions started, with
the additional dimensions of an economic recession and associated
challenges re access to capital and the collapse in the oil and
gas prices. The effects of this are being seen by the rapid decline
in the capital and exploration expenditure within the sector.
We do not believe that the changes contained within the 2009 Budget
are adequate to attract investment and stimulate activity at a
sufficient level. (Shell UK) [104]
81. In their evidence to us the Government said that
while "there is no stated "next step" for the discussions….
that should certainly not be taken as a sign that the Government
considers that the process of engagement is at an end. The Government
will continue to engage with stakeholders wherever necessary to
ensure that the North Sea fiscal regime continues to help deliver
the best possible future for the UKCS. In particular, officials
from both DECC and HMT/HMRC have been asked to look further into
the question of post tax decommissioning security and to discuss
this complex area with Industry in the coming months."[105]
82. We would be surprised if industry representatives
did not call for a more congenial tax regime. However, it does
seem to us that concern that the Government's fiscal reforms do
not go far enough are genuine and legitimate. The quadruple whammy
faced by the industry - of high costs, low prices, lack of affordable
credit and a global recession - make this a difficult time. We
are not convinced that the field allowance and other measures
announced in Budget 2009 - albeit welcome - are sufficient to
create the competitive environment needed by the industry nor
that they will provide a strong enough incentive to exploit fully
remaining resources. We note and welcome the Government's commitment
to further engagement and hope that, should the measures so far
announced prove to be inadequate, more wide-ranging and generous
reforms of the fiscal regime will be forthcoming. A key part of
the UK's energy security strategy and the prospects of the 350,000
people who work in or with the UK oil and gas industry depend
on it.
60 Oil & Gas UK 2008 Economic Report - Summary Back
61
Ev 111, para 3.3 Back
62
Ev 111-112, para 3.3 Back
63
Ev 55, para 4 Back
64
Ibid, para 5 Back
65
Ev 103, para 3 Back
66
Ev 83, para 3 Back
67
HC Deb, 22 April 2009, col 246 Back
68
2009 Budget Note 10, North Sea Fiscal regime: Incentivising
Production, HMRC, 22 April 2009 Back
69
Ev 50 Back
70
Ev 112, para 3.3.4-5 Back
71
Ev 55, para 10 Back
72
Shell's evidence states that "Capital Uplift is an incentive
offered by government to encourage the contractor to maximize
investment. It is an additional amount of cost recovery on capital
expenditures over and above amounts spent e.g. if a company spends
$1,000,000 in recoverable capital expenditures and there is a
10% capital uplift in the contract, the company will be allowed
to recover 110% of actual spending or $1,100,000". Ev 130,
para 4 Back
73
Ev 130, para 4 Back
74
Ev 62, para 2.1.2.5 Back
75
Ev 112, para 3.3.4 Back
76
Ev 55, para 11 Back
77
Supporting Investment: A Consultation on the North Sea fiscal
regime, November 2008, HM Treasury and HM Revenue and Customs
Back
78
Ev 135, para 3 Back
79
Ev 55, para 10 Back
80
Supporting Investment: A Consultation on the North Sea fiscal
regime, November 2008, HM Treasury and HM Revenue and Customs Back
81
Ev 57, para 5 Back
82
Ibid, para 6 Back
83
Ibid, para 7 Back
84
Ev 115, para 2.1.1 Back
85
Ev 116, para 2.1.5 Back
86
Ibid, para 2.1.6 Back
87
Ev 107 Back
88
Ev 116, para 3.1.4 Back
89
Ev 107 Back
90
Ev 116, paras 3.1.2-3 Back
91
Ev 133, para 3 Back
92
Ibid, paras 4- 6 Back
93
Ev 133-134, paras 7-8 Back
94
Ev 83-84, para 4 Back
95
Ev 117, para 3.2.1 Back
96
Ev 134, para 9 Back
97
Ev 57, para 9 Back
98
Ev 112, para 3.3.5 Back
99
Ev 116, para 2.1.8 Back
100
Ev 73, para 60 Back
101
E.g., Shell UK, Ev 134, para 11. Back
102
Ev 117, para 4.6 Back
103
Ev 57, para 8 Back
104
Ev 134, paras 10-11 Back
105
Ev 84, para 5 Back
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